AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 1999
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RECKSON SERVICE INDUSTRIES, INC.
(Exact name of each registrant as specified in its charter)
RECKSON SERVICE
INDUSTRIES, INC. - DELAWARE RECKSON SERVICE INDUSTRIES, INC. - 11-3383642
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(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
10 EAST 50TH STREET
NEW YORK, NEW YORK 10022
(212) 753-6363
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(Address, including zip code, and telephone number, including area code, of
each registrant's principal executive office)
SCOTT H. RECHLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RECKSON SERVICE INDUSTRIES, INC.
10 EAST 50TH STREET
NEW YORK, NEW YORK 10022
(212) 931-8000
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(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Copies to:
EDWARD F. PETROSKY, ESQ.
J. GERARD CUMMINS, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER, 58TH FLOOR
NEW YORK, N.Y. 10048
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box.|_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than
securities offered only in connection with dividend or interest reinvestment
plans, please check the following box.|X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.|X|
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C>
Title of Class of Proposed Maximum Amount of
Securities to be Registered Aggregate Offering Registration Fee(7)
Price(1)
Common Stock, $.01 par value per share(2), Common Stock Warrants (3),
Preferred Stock(4), Depositary Shares representing Preferred Stock (5),
Preferred Stock Warrants and Debt Securities(6) $500,000,000 $139,000
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Such indeterminate number of shares of common stock of Reckson
Service Industries, Inc. as may from time to time be issued at
indeterminate prices, upon exercise of common stock warrants of
Reckson Service Industries, Inc. or upon conversion of preferred
stock for debt securities of Reckson Service Industries, Inc.,
as the case may be.
(3) Warrants to purchase common stock of Reckson Service Industries, Inc.
may include rights to purchase common stock of Reckson Service
Industries, Inc. issued as a dividend to holders of such Common Stock,
for which no separate consideration is received.
(4) Such indeterminate number of shares of preferred stock of Reckson
Service Industries, Inc. as may from time to time be issued in series
at indeterminate prices, upon exercise of preferred stock warrants of
Reckson Service Industries, Inc. or upon conversion of debt securities
of Reckson Service Industries, Inc., as the case may be.
(5) To be represented by depositary receipts of Reckson Service
Industries, Inc. representing an interest in all or a specified
portion of a share of preferred stock of Reckson Service Industries,
Inc.
(6) Such indeterminate principal amount of debt securities of Reckson
Service Industries, Inc. as may from time to time be issued in series
at indeterminate prices or upon conversion of preferred stock of
Reckson Service Industries, Inc., as the case may be; or, in the
event of the issuance of original issue discount securities, a higher
principal amount as may be sold for an aggregate initial offering
price not to exceed $500,000,000.
(7) Calculated pursuant to Rule 457(o) under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON THE DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 3, 1999
PROSPECTUS
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$500,000,000
RECKSON SERVICE INDUSTRIES, INC.
COMMON STOCK, COMMON STOCK WARRANTS,
PREFERRED STOCK, PREFERRED STOCK WARRANTS, DEPOSITARY SHARES,
DEBT SECURITIES AND RIGHTS TO PURCHASE COMMON STOCK
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Reckson Service Industries, Inc. may offer up to $500,000,000 of
shares of our common stock, shares of our preferred stock, depositary shares
representing interests in our preferred stock, warrants to purchase shares of
our common stock (including rights to purchase our common stock) or preferred
stock and our debt securities in one or more series. Our common stock is
quoted on the over-the-counter bulletin board under the symbol "RSII."
We may offer the securities at prices and on terms to be set forth in
one or more supplements to this prospectus. The securities may be offered
directly, through agents on our behalf or through underwriters or dealers.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS FOR A
DESCRIPTION OF RISKS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE
SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is ___________ __, 1999.
<PAGE>
RISK FACTORS
This prospectus contains forward-looking statements which involve
risks and uncertainties. Our actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
a difference include, but are not limited to, those discussed below. An
investment in the securities involves various risks. Prospective investors
should carefully consider the following information in conjunction with the
other information contained in this prospectus and the related prospectus
supplement before purchasing the securities offered by the related prospectus
supplement.
OUR LACK OF OPERATING HISTORY IMPAIRS OUR ABILITY TO PREDICT FUTURE EARNINGS
AND WE HAVE SUSTAINED OPERATING LOSSES SINCE OUR INCEPTION
We were formed in July 1997 and have operated as a public company
since June 1998. We have sustained operating losses since our inception and
expect to sustain operating losses in the near future. The financial
information relating to us and our subsidiaries and their respective assets
presented elsewhere in this prospectus are not necessarily indicative of our
or our subsidiaries' future consolidated financial condition or results of
operations.
CERTAIN MEMBERS OF OUR SENIOR MANAGEMENT LACK EXPERIENCE IN OUR INVESTMENT
SECTORS
Three of the nine members of our senior management, including our
chief executive officer, are executive officers of Reckson Associates Realty
Corp. ("Reckson Associates") and have served as part of our senior management
since prior to the spin-off distribution of our shares from Reckson
Associates. Although since the spin-off we have retained members of senior
management who have relevant experience and we may retain the management of
the businesses that we acquire, the primary experience of those three officers
is in the business of acquiring, developing, and redeveloping suburban office
and industrial properties in the New York "Tri-State" area and not in pursuing
our investment objectives.
WE CANNOT ASSURE OUR ABILITY TO MANAGE GROWTH
We intend to expand our operations through the acquisition of, or
investment in, services businesses. In addition, Reckson Strategic Venture
Partners, LLC, our subsidiary ("Reckson Strategic Venture Partners"), may also
expand rapidly through the acquisition of real estate and real estate
operating companies. The success of our growth strategies will depend on our
ability to identify attractive business opportunities and effectively operate
and integrate any newly acquired businesses. Our growth plans will require the
participation of, and place demands upon, our management and operating
personnel. Our ability to manage future growth effectively requires the
development of operational, financial and management information systems. We
cannot assure that we will effectively manage our growth. If we are unable to
manage our growth effectively, it may adversely affect our business, results
of operations and financial condition.
OUR STRATEGY OF GROWTH THROUGH ACQUISITIONS INVOLVES RISKS AND MAY RESULT IN
LOSSES
Acquisition is a significant source of our growth. We cannot assure
that suitable acquisition opportunities will be available to us or our
affiliates. We also cannot assure that we or our affiliates will not overpay
for acquisitions or the efficient and adequate integration of these
acquisitions. Significant competition may exist for targeted acquisitions.
Some of the companies in which we acquire an interest may have (i) little or
no operating histories, (ii) historical operating losses, and (iii)
competitors that are larger and more well capitalized. Some of our or our
affiliates' acquisitions may be involved in sectors that are subject to
increasing competition. As a result, the costs incurred to acquire or
reposition companies may be significant and non-recoverable. Furthermore, we
can not assure that acquisitions will not result in additional losses.
The acquisition of interests in start-up companies involves a high
degree of business and financial risk that can result in substantial losses.
Among these are the risks associated with investment in companies in an early
stage of development or with little or no operating history, companies
operating at a loss or with substantial variations in operating results from
period to period, and companies with the need for substantial additional
capital to support expansion or to achieve or maintain a competitive position.
Such companies may face intense competition, including competition from
companies with greater financial resources, more extensive development,
manufacturing, marketing and service capabilities, and a larger number of
qualified managerial and technical personnel. We may take significant
positions in companies in rapidly changing high-technology fields; such
companies may face special risks of product obsolescence and may encounter
intense competition from other companies financed by venture capitalists. In
addition, start-up companies may require significant additional capital
contributions from us.
We may hold our interests in start-up companies for an indefinite
period of time; and it may take several years from the date of our initial
acquisition of such interest for the start-up company to reach such a state of
maturity that disposition could be considered.
It is anticipated that a substantial portion of our holdings may
consist of securities that are subject to restrictions on sale because they
were acquired from the issuer in "private placement" transactions or because
we might be deemed to be an affiliate of the issuer. Generally, we would not
be able to sell these securities publicly without the expense and time
required to register the securities under the Securities Act of 1933 or to
sell the securities under Rule 144 or other rules under the Securities Act
which permit only limited sales under specified conditions. When restricted
securities are sold to the public, we could be deemed an "underwriter", or
possibly a controlling person, with respect thereto for the purpose of the
Securities Act and be subject to liability as such under that Act.
In addition, practical limitations may inhibit our ability to sell
our holdings because the issuers thereof are privately held, we own a
relatively large percentage of the issuer's outstanding securities, or the
customers, joint venture associates, other investors, financial institutions
or management are relying on our continued investment. Sales may also be
limited by securities market conditions, which may be unfavorable for sales of
securities of particular issuers or issuers in particular industries. The
above limitations on liquidity of our holdings could prevent a successful sale
thereof, result in delay of any sale or reduce the amount of proceeds that
might otherwise be realized.
OUR BUSINESS AND FUTURE OPPORTUNITIES ARE RESTRICTED
We are prohibited under the Intercompany Agreement between us and
Reckson Operating Partnership, L.P. ("Reckson Operating Partnership") from
making REIT-Qualified investments unless the Reckson Operating Partnership is
given the right of first opportunity in respect of those investments and
chooses not to pursue the investments. In addition, if an investment becomes
available to one of our affiliates, the affiliate is required to allow the
Reckson Operating Partnership to participate in the investment to the extent
of our interest in the investment. Our charter provides that one of our
corporate purposes is to perform our obligations under the Intercompany
Agreement. We are also required to assist the Reckson Operating Partnership in
structuring and consummating any REIT-Qualified Investment presented to the
Reckson Operating Partnership which it elects to pursue. As a result, our and
our affiliates' business and future opportunities are restricted.
WE ARE HIGHLY DEPENDENT UPON THE RECKSON OPERATING PARTNERSHIP FOR FINANCING
We rely significantly on the Reckson Operating Partnership for the
financing of our operations. As a result, if Reckson Associates is unable to
access the financial markets, our ability to finance operations may be
severely restricted. Our credit facilities with Reckson Associates prohibit
advances to the extent the advances under the credit facilities could, in the
determination of Reckson Associates, endanger its status as a REIT. In
addition, if Reckson Associates should fail to qualify as a REIT or have a
decline in its financial or other condition or earnings, affairs or prospects,
it may substantially and adversely affect our ability to pursue business
opportunities and our financial condition.
WE RELY HEAVILY ON KEY PERSONNEL
Our success and the success of our partner companies depends
significantly upon the contribution of our executive officers, senior
management, and other key personnel that we retain. None of our executive
officers have an employment agreement with our company. The two managing
directors of Reckson Strategic Venture Partners have entered into employment
contracts with RSVP Holdings, LLC, the managing member of Reckson Strategic
Venture Partners. Conversely, two of our executive officers have employment
agreements with Reckson Associates pursuant to which they have agreed to spend
as much time as may be necessary in carrying out their duties to Reckson
Associates. These executive officers do not have similar obligations to the
Company. Furthermore, we cannot assure that we or our partner companies will
retain key managerial and other personnel or attract suitable replacements or
additional personnel if required. We have not obtained key-man insurance for
any of our executive officers or other key personnel.
WE MAY HAVE CONFLICTS OF INTERESTS WITH RECKSON ASSOCIATES
CONFLICTS AS A RESULT OF OVERLAPPING MANAGEMENT. Donald J. Rechler
serves as the Chairman of the Board and the Chief Executive Officer of Reckson
Associates and our Chairman of the Board. Scott H. Rechler serves as the
President and the Co-Chief Executive Officer of Reckson Associates and our
President and Chief Executive Officer and is a director of Reckson Associates
and our company. Michael Maturo serves as Executive Vice President, Treasurer
and Chief Financial Officer of Reckson Associates and the Company and is a
director of the Company. Furthermore, Roger Rechler, Gregg Rechler and
Mitchell Rechler are executive officers of Reckson Associates and Roger
Rechler and Mitchell Rechler are directors of Reckson Associates, while all
three individuals are directors of our company. In addition, Jason M. Barnett
serves as our Executive Vice President and General Counsel and in the same
capacity for Reckson Associates. Although each of the individuals referred to
above is committed to our success, they are also committed to the success of
Reckson Associates. As of June 30, 1999, Reckson Associates' senior management
and directors beneficially owned approximately 9.4% of the outstanding common
stock of Reckson Associates and approximately 31% of our outstanding common
stock. In calculating the ownership of common stock of Reckson Associates, we
have included Reckson Associates common stock and its Class B common stock;
and we have assumed the exchange of all limited partnership units in the
Reckson Operating Partnership for shares of common stock and the exercise of
all vested stock options. There is a risk that the common membership of
management, members of the Boards of Directors and ownership of Reckson
Associates and the Company will lead to conflicts of interest in the fiduciary
duties owed to stockholders by common directors and officers in connection
with transactions between the two companies, as well as a conflict in
allocating management time.
CONFLICTS UNDER THE INTERCOMPANY AGREEMENT. In connection with the
spin-off distribution of our common stock, we entered into a Intercompany
Agreement with the Reckson Operating Partnership to formalize our relationship
at the outset and to limit conflicts of interest. The Intercompany Agreement
was not negotiated at arms' length since 95% of our capital stock was owned by
the Reckson Operating Partnership at the time it was executed. Under the
intercompany agreement, we granted the Reckson Operating Partnership a right
of first opportunity to make any REIT-qualified investment that becomes
available to us. In addition, if a REIT-qualified investment opportunity
becomes available to an affiliate of ours, including Reckson Strategic Venture
Partners, 100% of the common ownership interest of which is indirectly owned
by us, the intercompany agreement requires our affiliate to allow the Reckson
Operating Partnership to participate in the opportunity to the extent of our
interest in the affiliate.
Under the intercompany agreement, the Reckson Operating Partnership
granted us a right of first opportunity to provide to the Reckson Operating
Partnership and its tenants any type of non-customary commercial services for
occupants of office, industrial and other property types, which Reckson
Associates may not be permitted to provide because they may generate REIT
non-qualifying income under Federal tax laws. We will provide services to the
Reckson Operating Partnership at rates and on terms as attractive as either
the best available for comparable services in the market or those offered by
us to third parties. In addition, the Reckson Operating Partnership will give
us access to its tenants with respect to commercial services that may be
provided to tenants.
Under the intercompany agreement, subject to certain conditions, the
Reckson Operating Partnership granted us a right of first refusal to become
the lessee of any real property acquired by the Reckson Operating Partnership
if it determines that the operation of the property may involve the
performance of non-customary services that would jeopardize Reckson
Associates' REIT status, it is required to enter into a "master" lease
arrangement. Pursuant to a this "master" lease arrangement, the Reckson
Operating Partnership would own the property, but lease it entirely to a
single lessee that would operate the property.
With respect to services that we will provide to the Reckson
Operating Partnership, management will have a conflict of interest relating to
the market rates being charged to the Reckson Operating Partnership for these
services. In addition, management will have a conflict of interest in
determining whether we or the Reckson Operating Partnership should pursue a
REIT-qualified investment opportunity outside of Reckson's core business
strategy of investing in office and industrial properties in the New York
Tri-State area. Furthermore, we and the Reckson Operating Partnership may
structure investments in joint ventures between the Reckson Operating
Partnership and Reckson Strategic Venture Partners, the Reckson Operating
Partnership may pursue the portion of investments generating REIT-qualified
income and Reckson Strategic Venture Partners will pursue directly the other
portion of these investments. Accordingly, Reckson Strategic Venture Partners
and Reckson Strategic Venture Partners-Reckson Operating Partnership joint
ventures may have conflicts of interest in the structuring, valuation,
management and disposition of these investments.
CONFLICTS IN OUR LOANS WITH RECKSON; LIMITATION ON OUR ABILITY TO PAY
DIVIDENDS. In June 1998, we established a credit facility with the Reckson
Operating Partnership (the "Reckson Service Industries Facility") in the
amount of $100 million for our service sector operations and other general
corporate purposes. In addition, in June 1998, the Reckson Operating
Partnership authorized the investment of $100 million with respect to the
funding of the investment of Reckson Strategic Venture Partners (the "Reckson
Strategic Venture Partners Commitment"). Amounts available under the Reckson
Strategic Venture Partners Commitment are funded through investments by the
Reckson Operating Partnership into joint ventures with Reckson Strategic
Venture Partners or through loans to Reckson Service Industries, Inc. under a
credit agreement with terms substantially identical to those under the Reckson
Service Industries Facility. Although the credit agreement provides for the
borrowing of up to $100 million from the Reckson Operating Partnership, the
amount available is reduced by the amount of any joint venture investments
between the Reckson Operating Partnership and Reckson Strategic Venture
Partners. Loans under the Reckson Strategic Venture Partners Commitment in
excess of $25 million in any single investment are subject to approval by the
Board of Directors of Reckson, while advances under the Reckson Service
Industries Facility in excess of $10 million in respect of any single
investment are subject to approval by the Board of Directors of Reckson, or a
committee thereof. The Reckson Service Industries Facility has a term of five
years and advances thereunder are recourse obligations of our company.
Interest accrues on advances made under the Reckson Service Industries
Facility at a rate equal to the greater of (1) the prime rate plus 2% and (2)
12% per annum, with the rate on amounts that are outstanding for more than one
year increasing annually at a rate of 4% of the prior year's rate. Prior to
maturity, interest is payable quarterly but only to the extent of net cash
flow and on an interest-only basis and is prepayable without penalty at our
option.
As long as there are outstanding advances under the Reckson Service
Industries Facility or borrowings by us under the credit agreement with
respect to the Reckson Strategic Venture Partners Commitment, we are
prohibited from paying dividends on any shares of our capital stock. The
Reckson Service Industries Facility and the credit agreement with respect to
the Reckson Strategic Venture Partners Commitment are subject to certain other
covenants and prohibit advances thereunder to the extent the advances could,
in Reckson's determination, endanger the status of Reckson as a REIT. The
terms of the Reckson Service Industries Facility and the credit agreement with
respect to the Reckson Strategic Venture Partners Commitment were not
negotiated at arms' length and thus may not reflect terms that could have been
obtained from independent third parties. Additional indebtedness may be
incurred by our subsidiaries. As of June 30, 1999, borrowings under the
Reckson Service Industries Facility aggregated approximately $46.4 million and
pursuant to the Reckson Strategic Venture Partners Commitment, the Reckson
Operating Partnership had made $16.3 million in joint venture investments with
Reckson Strategic Venture Partners and had loaned $20.6 million under the
credit agreement.
POLICIES WITH RESPECT TO CONFLICTS OF INTEREST MAY NOT BE SUCCESSFUL.
We have adopted policies designed to eliminate or minimize conflicts of
interest. These policies include the approval of all transactions in which our
directors or officers have a conflicting interest by a majority of the
directors who are neither officers nor affiliated with us. These policies do
not prohibit sales of assets to or from affiliates, but would require the
sales to be approved by the independent directors of the Company. However,
there is no assurance that these policies will be successful and, if they are
not successful, decisions could be made that might fail to reflect fully the
interests of all of our stockholders.
RELATED PARTY TRANSACTIONS MAY LEAD TO LESS FAVORABLE TERMS
Jon L. Halpern, a former executive officer and former director of
Reckson, beneficially owned substantially all of the OnSite business prior to
our acquisition of an interest in OnSite and, as of June 30, 1999, continued to
own an approximate 12.76% interest. As of June 30, 1999, Mr. Halpern also owned
(i) a 33-1/3% interest in a joint venture that owns a 70% interest in the Dobie
Center, a student housing facility in which Reckson Strategic Venture Partners
owns a 23.33% interest, (ii) a subordinated carried interest amount in a joint
venture that owns a 77.77% interest in ACC; a student housing management company
in which Reckson Strategic Venture Partners owns 77.77% interest, and (iii)
approximately a 8.3% interest in VANTAS Incorporated ("Vantas"), an office
suites company in which we own an approximately 26.2% interest. He may
participate in the operation of these entities. Our management believes that our
participation in these investments with Mr. Halpern has been the subject of
arm's-length negotiations.
WE HAVE NO PRIOR SPONSORSHIP OF A VENTURE CAPITAL VEHICLE AND MAY INVEST IN
COMPANIES IN AN EARLY STAGE OF DEVELOPMENT OR WITH HISTORICAL OPERATING LOSSES
Reckson Strategic Venture Partners is a real estate venture capital
entity formed to acquire interests in real estate and real estate-related
operating companies. We have committed up to $100 million in Reckson Strategic
Venture Partners although such commitment is reduced by the amount of any
investments made by Reckson Operating Partnership into joint ventures with
Reckson Strategic Venture Partners. A subsidiary of ours serves as the
managing member of Reckson Strategic Venture Partners. Neither we nor Reckson
have previously sponsored a real estate venture capital entity. Reckson
Strategic Venture Partners' holdings may include, among other things, holdings
in companies in an early stage of development that have historical operating
losses. In addition, decreases in values in the property markets, volatility
in the securities markets, interest rate increases and unfavorable conditions
in the economy generally, and in the real estate industry in particular, may
have a negative impact on the performance of Reckson Strategic Venture
Partners.
Reckson Strategic Venture Partners has obtained a $200 million
preferred equity facility from Paine Webber Real Estate Securities ("PWRES"),
which is partially funded by an investment fund that is jointly sponsored by
financier George Soros and PWRES. Under the terms of the PaineWebber equity
facility, Reckson Strategic Venture Partners is subject to various covenants
and events of default and related remedies. Such remedies include increased
control rights of PWRES over the operation of Reckson Strategic Venture
Partners under certain circumstances. In addition, PWRES and such investment
fund, if applicable, receive a priority or preferred distribution from the
operations of Reckson Strategic Venture Partners prior to the distribution of
cash to our subsidiary serving as the managing member of Reckson Strategic
Venture Partners. The Reckson Strategic Venture Partners Managing Directors
are entitled to a portion of the profits of the managing member of Reckson
Strategic Venture Partners after we obtain a return of our capital plus a
minimum return. As a result, we cannot assure that the Reckson Strategic
Venture Partners Managing Directors will not pursue investments involving
greater risk in seeking higher profits. Any investments identified by the
Reckson Strategic Venture Partners Managing Directors are subject to our
approval.
OWNERSHIP OF ASSETS THROUGH PARTNER COMPANIES AND JOINT VENTURES COULD LIMIT
OUR CONTROL OF THOSE INVESTMENTS
We and Reckson Strategic Venture Partners anticipate holding a
significant portion of our assets through ownership of an interest in joint
ventures and in "partner companies" in which we own a significant interest and
participate in management and other parties also own an interest. These
investments may involve risks not otherwise present for investments made
solely by us, including the possibility that our co-venturer or other owners
of partner companies might become bankrupt, that our co-venturer or other
owners of partner companies might at any time have different interests or
goals than we do, and that our co-venturer or other owners of partner
companies may take action contrary to our instructions, requests, policies or
objectives. Other risks of joint venture investments and holdings in partner
companies include impasse on decisions, such as a sale, because neither our
partner or co-venturer nor us would have full control over the joint venture
or partner company. There is no limitation under our organizational documents
as to the amount of funds that may be invested in joint ventures or partner
companies.
In addition, if we do not control sufficiently one or more of our
partner companies, our investment in those companies may be considered
"investment securities" under the Investment Company Act of 1940. Generally,
any company that owns investment securities with a value exceeding 40% of its
total assets (excluding cash items and government securities) is an
"investment company" subject to registration under, and compliance with, the
1940 Act unless a particular exemption or safe harbor applies. Compliance with
the 1940 Act might be very costly and difficult. In addition, there could be
negative consequences if we are found to be operating as an unregistered
investment company. At the same time, if we are required to take actions, such
as the acquisition or disposition of investments, to avoid being considered an
investment company it also may have negative consequences. Accordingly,
matters related to the 1940 Act may at any time harm our business and results
of operations.
OUR HOLDINGS IN ONSITE ACCESS, INC., A COMPANY WITH A LIMITED OPERATING
HISTORY, EXPOSE US TO REGULATORY RISKS AS WELL AS THE RISK OF TECHNOLOGICAL
OBSOLESCENCE
Our holdings include an approximately 33% interest in Onsite Access,
Inc ("Onsite"). Onsite is a privately-held company that provides advanced
telecommunication systems and services within commercial buildings. Onsite has
been in existence since 1999, has a relatively small capitalization, and has
historical operating losses. We anticipate that Onsite will continue to grow
rapidly, but we cannot assure when, if ever, Onsite will become profitable.
Onsite's success is contingent upon its ability to continue to obtain
contracts to wire buildings for the delivery of internet access, data and
voice transport services. In addition, certain executive officers at Onsite
have only recently been hired and OnSite's future success will be dependent,
in part, on such executives' ability to perform effectively.
Our holdings in Onsite are exposed to risks specific to the
telecommunications industry. The industry is regulated on both the federal and
state level and we can not assure that governmental regulations that adversely
affect our investment will not be passed. Additionally, the technology sector
is constantly undergoing rapid change and innovation. Onsite is therefore
subject to the risk that its technological services could become obsolete.
OUR HOLDINGS IN VANTAS EXPOSE US TO REAL ESTATE AND OPERATIONAL RISKS
Our holdings include an approximately 23% fully diluted interest in
Vantas. Vantas is a company that provides tenants with furnished office
suites and immediate support services, included but not limited to,
secretarial services, telecommunication services and conference facilities.
The executive office suites industry is subject to risks comparable to the
real estate industry. Supply and demand and the location of office buildings
are all factors that directly affect the office suites industry. A significant
downturn in the real estate market could adversely affect our investment in
Vantas.
Vantas was recently formed and is the successor to three separate
executive office suite companies. The management team at Vantas has not worked
together as a unit and we can not assure that the integration of the three
office suite companies will be successful.
THE STUDENT HOUSING SECTOR EXPOSES US TO PARTICULAR RISKS
Through Reckson Strategic Venture Partners we hold a 77.77% in
American Campus Communities, a manager of student housing facilities, and a
23.33% interest in the Dobie Center, a student housing facility located near
the campus of the University of Texas. The student housing business is a
fragmented sector undergoing rapid development and change. In addition to
traditional real estate risks, student housing risks include economic, social,
governmental and demographic factors as they relate to the number of students
attending colleges and universities in need of student housing. Student
housing facilities are to a large extent reliant upon the well-being of the
colleges or universities to which such facilities relate. Student housing
facilities are possibly subject to competition from colleges and universities
as well as other providers of student housing. In addition, the maintenance
and insurance costs of student housing may exceed the costs typical of
multifamily housing. Furthermore, due to the nature of student housing,
turnover of tenants is significant and student housing is less utilized during
summer months.
WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE
We intend to use our available funds to pursue investment and
business opportunities. Therefore, we do not anticipate the payment of any
dividends on our common stock in the foreseeable future. Payment of dividends
on our common stock is prohibited under the credit facilities until all
amounts outstanding under the credit facilities are paid in full. The payment
of dividends will also be subject to any limitations imposed by other credit
facilities and debt securities that we may obtain or issue in the future.
REAL ESTATE RISKS MAY AFFECT OUR EARNINGS
Our holdings include real estate and real estate-related assets,
particularly through our holdings in Reckson Strategic Venture Partners.
Investments in real estate are subject to the risks incident to the ownership
and operation of real estate. Our real estate holdings may be adversely
affected by a number of factors, including:
o real estate holdings are generally illiquid
o the national, state and local economic climate and real estate
conditions, such as oversupply of or reduced demand for space
and changes in market rental rates
o the need to periodically renovate, repair and relet our space
o increasing operating costs, including real estate taxes and
utilities, which may not be passed through to tenants
o defaults by our tenants or their failure to pay rent on a
timely basis
o uninsured losses
Through Reckson Strategic Venture Partners, we have real estate and
real estate-related holdings in the areas of student housing, assisted living
and government occupied buildings. Reckson Strategic Ventures Partners is
likely to make additional acquisitions in commercial real estate, and may,
particularly through joint ventures be involved in the development of real
estate. Development and construction activities in connection with these types
of investments include risks of cost overruns, completion and lease-up delays,
unavailability of financing and changes in market conditions.
Our development activities are also subject to risks relating to the
inability to obtain, or delays in obtaining, all necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations. If any of the above events occur, the revenues received from
Reckson Strategic Venture Partner's real estate investments and the values of
these investments could be adversely affected. In addition, new development
activities, regardless of whether or not they are ultimately successful,
typically require a substantial portion of management's time and attention.
ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY
Federal, state and local laws and regulations relating to the
protection of the environment may require a current or previous owner or
operator of real estate to investigate and clean up hazardous or toxic
substances or petroleum product releases at a property. An owner of real
estate is liable for the costs of removal or remediation of certain hazardous
or toxic substances on or in the property. These laws often impose such
liability without regard to whether the owner knew of, or caused, the presence
of the contaminants. Clean-up costs and the owner's liability generally are
not limited under the enactments and could exceed the value of the property
and/or the aggregate assets of the owner. The presence of or the failure to
properly remediate the substances may adversely affect the owner's ability to
sell or rent the property or to borrow using the property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the clean-up costs of the substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by the person. Even if more than one person was responsible for the
contamination, each person covered by the environmental laws may be held
responsible for the clean-up costs incurred. In addition, third parties may
sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal
of asbestos-containing materials ("ACMs"). These laws impose liability for
release of ACMs into the air and third parties may seek recovery from owners
or operators of real properties for personal injury associated with ACMs. In
connection with the ownership (direct or indirect), operation, management and
development of real properties, we may be considered an owner or operator of
properties containing ACMs. We may be potentially liable for removal,
remediation and other costs, including governmental fines and injuries to
persons and property.
CERTAIN ANTITAKEOVER PROVISIONS MAY DETER THIRD PARTY ACQUISITION PROPOSALS
Our charter and bylaws and applicable sections of the Delaware
General Corporation Law may make the acquisition of control of our company
more difficult without the approval of our Board of Directors. Certain
provisions of our charter and bylaws, among other things:
o classify our Board of Directors into three classes, each of
which serves for staggered three-year terms;
o provide that any of our directors may be removed by the
affirmative vote of stockholders having at least 80% of the
total voting power only for cause;
o provide that only the Chairman of the Board, President or a
majority of our Board of Directors may call special meetings of
the stockholders;
o provide that the stockholders may take action only at a meeting
of our stockholders, not by written consent;
o provide that stockholders must comply with certain advance
notice procedures in order to nominate candidates for election
to our Board of Directors or to place stockholders' proposals
on the agenda for consideration at meetings of the
stockholders;
o provide that, under certain circumstances, the affirmative vote
of the holders of two-thirds of our common stock is required to
approve any merger or similar business combination involving
our company;
o provide that the holder of "control shares" of our company
acquired in a control share acquisition have no voting rights
with respect to such control shares except to the extent
approved by the vote of the holders of two-thirds of our common
stock;
o subject to certain exceptions, limit the ownership by any
person of our common stock to 9.9% of the number of shares or
value of our common stock and limit the ownership by any person
of our capital stock to 9.9% of the aggregate value of all
classes of our capital stock; and
o provide that the stockholders may amend or repeal any of the
foregoing provisions of the charter or bylaws only by a vote of
at least 80% of the stock entitled to vote generally in the
election of directors.
With certain exceptions, Section 203 of the Delaware General
Corporation Law imposes certain restrictions on mergers and other business
combinations between our company and any holder of 15% or more of our common
stock. The charter provides that the foregoing provisions and Section 203 do
not apply to Reckson and its affiliates. Accordingly, Reckson and its
affiliates are in a position to effect a business combination or other
transaction with us in situations where others are restricted from effecting a
similar transaction. Our charter authorizes the Board of Directors to issue up
to 25 million shares of preferred stock, par value $.01 per share, in series,
and to establish the rights and preferences (including the exchange of such
shares of preferred stock into shares of our Common Stock) of any series of
preferred stock so issued. The issuance of certain types of preferred stock
could have the effect of delaying or preventing a change in control of our
company, even if such a change in control were in the best interests of some,
or a majority, of our stockholders.
RISK OF IMPACT OF YEAR 2000 ISSUE ON OUR OPERATIONS AND FINANCIAL RESULTS
Some of our older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time-sensitive software that recognizes a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculation causing disruptions of operations, including, among other
things, a temporary inability to process transactions, or engage in similar
normal business activities.
We have completed an assessment to modify or replace portions of our
software so that our computer systems will function properly with respect to
dates in the year 2000 and thereafter. Since our accounting software is
maintained and supported by a third party, the total year 2000 project cost is
estimated to be minimal.
Our year 2000 project is complete to date. Additionally, we have
received assurances from our significant service providers that all of our
systems are currently year 2000 compliant or will be made compliant prior to
any impact on those systems. However, we cannot guarantee that all service
providers will comply with their assurances and therefore we may not be able
to determine year 2000 compliance of those contractors. At that time, we will
determine the extent to which we will be able to replace non-compliant service
providers. We believe that with modifications to existing software and
conversion to new software, the year 2000 issue will not pose significant
operational problems for our computer systems. However, if modifications and
conversions are not made, or are not completed timely, the year 2000 issue
could have a material impact on our operations.
To date, we have expended approximately $66,000 in connection with
year 2000 issues. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those anticipated.
Specific factors that might cause material differences include, but are not
limited to the availability and costs of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
In a "worst case scenario" of the failure of the third party to
timely deliver the necessary upgrades to the accounting software, we would
manually process transactions, such as the issuance of disbursements, until an
alternative system is implemented.
If we are not successful in implementing our year 2000 compliance
plan, we may suffer a material adverse impact on our results of operations and
financial condition. Because of the importance of addressing the year 2000
issue, we expect to develop contingency plans if we determine that the
compliance plans will not be implemented.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). These reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the regional offices of the
Commission at 7 World Trade Center (13th Floor), New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such information can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
We have filed with the Commission a registration statement on Form
S-3 under the Securities Act with respect to the securities. This prospectus
does not contain all of the information set forth in the registration
statement, certain parts of which have been omitted in accordance with the
rules and regulations of the Commission. For further information regarding us
and the securities, reference is made to the registration statement, including
the exhibits filed as a part thereof, and the documents incorporated by
reference in this prospectus. Statements made in this prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each contract, agreement or other
document filed as an exhibit to the registration statement or to an Exchange
Act report, reference is made to the exhibit for a more complete description
of the matter involved, and each statement shall be deemed qualified in its
entirety by reference. Copies of the registration statement and the exhibits
may be inspected, without charge, at the offices of the Commission, or
obtained at prescribed rates from the Public Reference Section of the
Commission at the address set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by us with the Commission
pursuant to the Exchange Act are incorporated by reference in this prospectus:
SEC FILINGS (FILE NO. 1-14183) PERIOD
- ------------------------------ ------
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarter ended March 31, 1999
Current Reports on Form 8-K Filed April 16, 1999, March 24, 1999,
(including Form 8-K/A) January 25, 1999 and January 19, 1999
Registration Statement on Form 8-A Filed June 1, 1998
We also incorporate by reference each of the following documents that
we will file with the Commission after the date of this prospectus until the
particular offering is completed or after the date of the initial registration
statement and prior to effectiveness of the registration statement:
o Reports filed under Section 13(a) and (c) of the Exchange Act;
o Definitive proxy or information statements filed under Section
14 of the Exchange Act in connection with any subsequent
stockholders' meeting; and
o Any reports filed under Section 15(d) of the Exchange Act.
We will provide a copy of any or all of these documents (exclusive of
exhibits unless the exhibits are specifically incorporated by reference
therein), without charge, to each person to whom this prospectus is delivered,
upon written or oral request to Reckson Service Industries, Inc., 10 East 50th
Street, New York, New York 10022, Attn: Jason M. Barnett, Executive Vice
President and General Counsel, telephone number (212) 931-8000.
THE COMPANY
We were incorporated in July 1997 and completed the spin-off
distribution of our common stock to shareholders of Reckson Associates on June
11, 1998. We were formed to create a service company that focuses on providing
outsourced business services to small to medium sized companies. We seek to
accomplish this by identifying and acquiring interests in operating companies
that engage in such outsource service businesses or by forming and growing
such businesses ourselves.
Our primary business is to create and manage a system of interrelated
outsource business services to be offered to small to medium sized companies
in the marketplace through an e-commerce based infrastructure. Over time, our
strategic goal is to develop and package a bundle of outsource business
service products that we will market as a "one stop" solution to satisfy the
outsourcing needs of small to medium sized businesses. Our growth strategy is
to acquire businesses or significant interests in businesses in targeted
business service sectors, and, where appropriate, to retain the existing
management of such businesses. Specifically, we seek opportunities for which
there is broad demand in the marketplace, strong entrepreneurial management, a
reputation for high quality services and growth potential. We seek to add
value by supporting management, offering strategic advice and assisting in
other aspects of developing the businesses where appropriate. We pursue growth
opportunities in each business by (i) accessing small to medium sized
companies included in Reckson Associates' customer base and in the general
marketplace nationwide, (ii) integrating each business into our centralized
e-commerce based infrastructure and (iii) acquiring other businesses with
complimentary outsource service products.
Through a subsidiary we are also a managing member of Reckson
Strategic Venture Partners, a real estate venture capital entity formed to
acquire interests in real estate and real estate-related operating companies
outside of Reckson Associates' core office and industrial focus. Reckson
Strategic Venture Partners' strategy is to identify and acquire interests in
established entrepreneurial enterprises with experienced management teams in
market sectors which are in the early stages of their growth cycle or offer
unique circumstances for attractive investments as well as platforms for
future growth. Reckson Strategic Venture Partners has established platforms in
the area of student housing, assisted living and privatization, and is
targeting additional market sectors, some of which may be complimentary to
Reckson's core office business such as parking facilities. Reckson Strategic
Venture Partners may also make investments in companies in which RSI holds an
interest and which provide business service products to the Reckson customer
base.
As an integral part of our business, we provide our partner companies
(i.e., companies in which we hold a significant interest) with administrative
and operational support services and with access to the experience of our
management. We are actively involved with the operational aspects of our
partner companies through the provision of advice concerning general
management, investor relations, financial management, human resources
management and other matters.
In pursuit of our outsource business service sector strategy, the
Company has acquired significant interests in and plays a significant role in
the development of two partner companies. As of June 30, 1999, the Company owns
an approximately 33% interest in OnSite Access, Inc., a privately-held company
that upgrades telecommunications infrastructures of multi-tenant office
buildings throughout the United States and provides small to medium sized
businesses who are tenants of such buildings with cost-effective access to broad
band Internet, data and voice network services through the use of DSL
technology. The Company owns an approximate 26.2% interest in Vantas, a
privately-held company that owns approximately 175 executive suite centers
throughout the United States and provides small to medium sized businesses with
professional office space, conference rooms, computer, fax and high speed
Internet capabilities, on-site support staff and other business services.
Our executive offices are located at 10 East 50th Street, New York,
New York 10022 and our telephone number at that location is (212) 931-8000. At
June 30, 1999, we and Reckson Strategic Venture Partners had an aggregate of
approximately 20 employees.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement,
the net proceeds from the sale of the securities offered by the applicable
prospectus supplement will be used for general corporate purposes, including
the repayment of existing indebtedness, in each case, as described in detail
in the prospectus supplement depending on the circumstances at the time of the
related offering.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to
fixed charges for the periods shown:
<TABLE>
<CAPTION>
Three Months ended Year Ended
March 31, 1999 December 31,
------------------ --------------------------------
1998 1997
---- ----
<S> <C> <C> <C>
Ratio of Earnings to Fixed Charges ($1,955,098)(1) ($8,079,858)(1) ($257,887)(1)
</TABLE>
____________
(1) Represents the excess of Fixed Charges over earnings.
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of income from
continuing operations before minority interest and fixed charges. Fixed
charges consist of interest expense (including interest costs capitalized) and
the amortization of organization costs.
DESCRIPTION OF DEBT SECURITIES
The debt securities covered by this prospectus (the "Debt
Securities") will be issued under an Indenture (the "Indenture") among the
Company and the trustee named therein (the "Trustee"). The form of Indenture
has been filed as an exhibit to the Registration Statement of which this
prospectus is a part and is available for inspection at the corporate trust
office of the trustee. The Indenture is subject to, and governed by, the Trust
Indenture Act of 1939, as amended (the "TIA"). The statements made hereunder
relating to the Indenture and the Debt Securities to be issued thereunder are
summaries of the material provisions thereof and do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
provisions of the Indenture and the Debt Securities. All section references
appearing herein are to sections of the Indenture, and capitalized terms used
but not defined herein shall have the respective meanings set forth in the
Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Company and will rank equally with all other unsecured and unsubordinated
indebtedness of the Company. The Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company, or as established in one
or more indentures supplemental to the Indenture. All Debt Securities of one
series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the holders of the Debt
Securities of the series, for issuances of additional Debt Securities of the
same series.
The Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indenture may resign or be removed with respect to one or
more series of Debt Securities, and a successor Trustee may be appointed to
act with respect to the series. In the event that two or more persons are
acting as Trustee with respect to different series of Debt Securities, each
Trustee shall be a trustee of a trust under the Indenture separate and apart
from the trust administered by any other Trustee, and, except as otherwise
indicated herein, any action described herein to be taken by a Trustee may be
taken by each Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.
Reference is made to the prospectus supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
(1) the title of the Debt Securities;
(2) the aggregate principal amount of the Debt Securities and any
limit on the aggregate principal amount;
(3) the percentage of the principal amount at which the Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof;
(4) the date or dates, or the method for determining the date or
dates, on which the principal of such Debt Securities will be
payable;
(5) the rate or rates (which may be fixed or variable), or the
method by which the rate or rates shall be determined, at which
the Debt Securities will bear interest, if any;
(6) the date or dates, or the method for determining the date or
dates, from which any interest will accrue, the dates on which
any interest will be payable, the record dates for such
interest payment dates, or the method by which any date shall
be determined, the person to whom the interest shall be
payable, and the basis upon which interest shall be calculated
if other than that of a 360-day year of twelve 30-day months;
(7) the place or places where the principal of (and premium, if
any) and interest, if any, on the Debt Securities will be
payable, the Debt Securities may be surrendered for
registration of transfer or exchange and notices or demands to
or upon the Company in respect of the Debt Securities and the
Indenture may be served;
(8) the date or dates on which or the period or periods within
which, the price or prices at which and the terms and
conditions upon which the Debt Securities may be redeemed, as a
whole or in part, at the option of the Company, if it is to
have an option;
(9) the obligation, if any, of the Company to redeem, repay or
purchase the Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and
the date or dates on which or the period or periods within
which, the price or prices at which and the terms and
conditions upon which the Debt Securities will be redeemed,
repaid or purchased, as a whole or in part, pursuant to its
obligation;
(10) if other than U.S. dollars, the currency or currencies in which
the Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or
a composite currency or currencies, and the terms and
conditions relating thereto;
(11) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on the Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on
a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which the amounts
shall be determined;
(12) any additional events of default or covenants of the Debt
Securities;
(13) whether the Debt Securities will be issued in certificated
and/or book-entry form;
(14) whether the Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof if other than $5,000 and
terms and conditions relating thereto;
(15) if the defeasance and covenant defeasance provisions described
herein are to be inapplicable or any modification of these
provisions;
(16) if the Debt Securities are to be issued upon the exercise of
debt warrants, the time, manner and place for the Debt
Securities to be authenticated and delivered;
(17) whether and under what circumstances the Company will pay
additional amounts on the Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the
Company will have the option to redeem such Debt Securities in
lieu of making a payment;
(18) if other than the Trustee, the identity of each security
registrar and/or paying agent; and
(19) any other material terms of the Debt Securities.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). If material or applicable,
special U.S. federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable prospectus supplement.
Except with respect to a covenant limiting the incurrence of
indebtedness, a covenant requiring a certain percentage of unencumbered assets
and a covenant requiring any successor in a business combination with the
Company to assume all of the obligations of the Company under the Indenture,
the Indenture does not contain any other provisions that would limit the
ability of the Company to incur indebtedness or that would afford Holders of
the Debt Securities protection in the case of any of the following events:
o a highly leveraged or similar transaction involving the
Company, the management of the Company, or any affiliate of any
these parties;
o a change of control; or
o a reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect the Holders of
the Debt Securities.
In addition, subject to the covenants referred to above, the Company
may, in the future, enter into certain transactions, such as the sale of all
or substantially all of its assets or the merger or consolidation of the
Company, that would increase the amount of the Company's indebtedness or
substantially reduce or eliminate the Company's assets, which may have an
adverse effect on the Company's ability to service its indebtedness, including
the Debt Securities. In addition, restrictions on ownership and transfers of
the Company's common stock and preferred stock may act to prevent or hinder a
change of control. See "Description of Common Stock--Restrictions on
Ownership" and "Description of Preferred Stock--Restrictions on Ownership."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable prospectus supplement,
the Debt Securities of any series which are registered securities, other than
registered securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Debt Securities which are bearer securities, other
than bearer securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $5,000.
Unless otherwise specified in the applicable prospectus supplement,
the principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee
provided that, at the option of the Company, payment of interest may be made
by check mailed to the address of the Person entitled thereto as it appears in
the applicable Security Register or by wire transfer of funds to the Person at
an account maintained within the United States.
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the Person in whose name the Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of the Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of the Debt Security not
less than 10 days prior to the Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of the
Debt Securities at the corporate trust office of the Trustee referred to
above. In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any series may be
surrendered for registration of transfer thereof at the corporate trust office
of the Trustee referred to above. Every Debt Security surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by
a written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Trustee
or the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. If the applicable
prospectus supplement refers to any transfer agent (in addition to the
Trustee) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any
transfer agent or approve a change in the location through which any transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each place of payment for the series. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities.
Neither the Company nor the Trustee shall be required to:
o issue, register the transfer of or exchange any Debt Security
if the Debt Security may be among those selected for redemption
during a period beginning at the opening of business 15 days
before selection of the Debt Securities to be redeemed and
ending at the close of business on the day of selection;
o register the transfer of or exchange any Registered Security so
selected for redemption in whole or in part, except, in the
case of any Registered Security to be redeemed in part, the
portion thereof not to be redeemed;
o exchange any Bearer Security so selected for redemption except
that the Bearer Security may be exchanged for a Registered
Security of that series and like tenor, provided that the
Registered Security shall be simultaneously surrendered for
redemption; or
o issue, register the transfer of or exchange any Security which
has been surrendered for repayment at the option of the Holder,
except the portion, if any, of the Debt Security not to be so
repaid.
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that the following conditions are met:
o the Company shall be the continuing entity, or the successor
entity (if other than the Company) formed by or resulting from
any consolidation or merger or which shall have received the
transfer of assets shall expressly assume payment of the
principal of (and premium, if any) and interest on all the Debt
Securities and the due and punctual performance and observance
of all of the covenants and conditions contained in the
Indenture;
o immediately after giving effect to the transaction, no Event of
Default under the Indenture, and no event which, after notice
or the lapse of time, or both, would become an Event of
Default, shall have occurred and be continuing; and
o an officer's certificate and legal opinion covering these
conditions shall be delivered to the Trustee.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder:
(a) default for 30 days in the payment of any installment of
interest on any Debt Security of the series;
(b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of the series at its maturity;
(c) default in making any sinking fund payment as required for any
Debt Security of the series;
(d) default in the performance of any other covenant of the Company
contained in the Indenture (other than a covenant added to the
Indenture solely for the benefit of a series of Debt Securities
issued thereunder other than the series), the default having
continued for 60 days after written notice as provided in the
Indenture;
(e) the Company, any subsidiary in which the Company has invested,
or is committed or otherwise obligated to invest, at least
$20,000,000 in capital or any entity in which the Company is
the general partner shall fail to pay any principal of, premium
or interest on or any other amount payable in respect of, any
recourse Indebtedness that is outstanding in a principal or
notional amount of at least $20,000,000 (or the equivalent
thereof in one or more other currencies), either individually
or in the aggregate (but excluding Indebtedness outstanding
hereunder), of the Company and its consolidated Subsidiaries,
taken as a whole, when the same becomes due and payable
(whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and the failure shall
continue after the applicable grace period, if any, specified
in any agreement or instrument relating to the Indebtedness, or
any other event shall occur or condition shall exist under any
agreement or instrument evidencing, securing or otherwise
relating to any the Indebtedness and shall continue after the
applicable grace period, if any, specified in the agreement or
instrument, if the effect of the event or condition is to
accelerate, or to permit the acceleration of, the maturity of
the Indebtedness or otherwise to cause, or to permit the holder
or holders thereof (or a trustee or agent on behalf of the
holders) to cause the Indebtedness to mature prior to its
stated maturity;
(f) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the
Company or any Significant Subsidiary or any of their
respective property;
(g) any other Event of Default provided with respect to a
particular series of Debt Securities.
If an Event of Default under the Indenture with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing,
then in every case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, the portion of the principal
amount as may be specified in the terms thereof) of all of the Debt Securities
of that series to be due and payable immediately by written notice thereof to
the Company (and to the Trustee if given by the Holders). However, at any time
after the declaration of acceleration with respect to Debt Securities of the
series (or of all Debt Securities then Outstanding under the Indenture, as the
case may be) has been made, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of not less than a
majority in principal amount of Outstanding Debt Securities of the series (or
of all Debt Securities then Outstanding under the Indenture, as the case may
be) may rescind and annul the declaration and its consequences if:
1. the Company shall have deposited with the Trustee all required
payments of the principal of (and premium, if any) and interest on the Debt
Securities of the series (or of all Debt Securities then outstanding under the
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the Trustee; and
2. all Events of Default, other than the non-payment of accelerated
principal of (or specified portion thereof), or premium (if any) or interest
on the Debt Securities of the series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) have been cured or waived
as provided in the Indenture.
The Indenture also provides that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
(or of all Debt Securities then Outstanding under the Indenture, as the case
may be) may waive any past default with respect to the series and its
consequences, except a default
o in the payment of the principal of (or premium, if any) or
interest on any Debt Security of the series or
o in respect of a covenant or provision contained in the
Indenture that cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security
affected thereby.
The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless the default
has been cured or waived; provided, however, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to the series (except a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of the series or in the
payment of any sinking fund installment in respect of any Debt Security of the
series) if specified Responsible Officers of the Trustee consider the
withholding to be in the interest of the Holders.
The Indenture provides that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
the Indenture or for any remedy thereunder, except in the case of failure of
the Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
the series, as well as an offer of reasonable indemnity. This provision will
not prevent, however, any holder of Debt Securities from instituting suit for
the enforcement of payment of the principal of (and premium, if any) and
interest on the Debt Securities at the respective due dates thereof.
Subject to provisions in the Indenture relating to its duties in case
of default, the Trustee is under no obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any Holders of
any series of Debt Securities then Outstanding under the Indenture, unless the
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity. The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon
the Trustee. However, the Trustee may refuse to follow any direction which is
in conflict with any law or the Indenture, or which may be unduly prejudicial
to the Holders of Debt Securities of the series not joining therein.
Within 120 days after the close of each fiscal year, the Company must
deliver a certificate of an officer certifying to the Trustee whether or not
the officer has knowledge of any default under the Indenture and, if so,
specifying each default and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities or series of Outstanding
Debt Securities which are affected by the modification or amendment; provided,
however, that no modification or amendment may, without the consent of the
Holder of each Debt Security affected thereby:
o change the Stated Maturity of the principal of, or premium (if
any) or any installment of interest on, any Debt Security,
reduce the principal amount of, or the rate or amount of
interest on, or any premium payable on redemption of, any Debt
Security, or reduce the amount of principal of an Original
Issue Discount Security that would be due and payable upon
declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of
repayment of the holder of any Debt Security, change the place
of payment, or the coin or currency, for payment of principal
of, premium, if any, or interest on any Debt Security or impair
the right to institute suit for the enforcement of any payment
on or with respect to any Debt Security;
o reduce the above-stated percentage of outstanding Debt
Securities of any series necessary to modify or amend the
Indenture, to waive compliance with certain provisions thereof
or certain defaults and consequences thereunder or to reduce
the quorum or voting requirements set forth in the Indenture;
o modify any of the foregoing provisions or any of the provisions
relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect
the action or to provide that certain other provisions may not
be modified or waived without the consent of the Holder of the
Debt Security.
In addition to the Company's obligation to pay the principal of, and
premium (if any) and interest on, the Debt Securities, the Debt Securities of
a series may be entitled to the benefits of additional covenants. Neither the
Company nor the Trustee may waive compliance with such additional covenants
unless the Holders of not less than a majority in principal amount of a series
of Outstanding Debt Securities consent to the waiver.
Modifications and amendments of the Indenture will be permitted to be
made by the Company and the Trustee without the consent of any Holder of Debt
Securities for any of the following purposes:
1. to evidence the succession of another Person to the Company as
obligor under the Indenture;
2. to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender
any right or power conferred upon the Company in the Indenture;
3. to add Events of Default for the benefit of the Holders of all
or any series of Debt Securities;
4. to add or change any provisions of the Indenture to facilitate
the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided
that this action shall not adversely affect the interests of
the Holders of the Debt Securities of any series in any
material respect;
5. to amend or supplement any provisions of the Indenture,
provided that no amendment or supplement shall materially
adversely affect the interests of the Holders of any Debt
Securities then Outstanding;
6. to secure the Debt Securities;
7. to establish the form or terms of Debt Securities of any
series;
8. to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under
the Indenture by more than one Trustee;
9. to cure any ambiguity, defect or inconsistency in the
Indenture, provided that this action shall not adversely affect
the interests of Holders of Debt Securities of any series in
any material respect; or
10. to supplement any of the provisions of the Indenture to the
extent necessary to permit or facilitate defeasance and
discharge of any series of the Debt Securities, provided that
the action shall not adversely affect the interests of the
Holders of the Debt Securities of any series in any material
respect.
In determining whether the Holders of the requisite principal amount
of Outstanding Debt Securities of a series have given any request, demand,
authorization, direction, notice, consent or waiver thereunder or whether a
quorum is present at a meeting of Holders of Debt Securities, the Indenture
provides that:
1. the principal amount of an Original Issue Discount Security
that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the
date of the determination upon declaration of acceleration of
the maturity thereof;
2. the principal amount of a Debt Security denominated in a
foreign currency that shall be deemed Outstanding shall be the
U.S. dollar equivalent, determined on the issue date for the
Debt Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent on
the issue date of the Debt Security of the amount determined as
provided in (1) above);
3. the principal amount of an Indexed Security that shall be
deemed Outstanding shall be the principal face amount of the
Indexed Security at original issuance, unless otherwise
provided with respect to the Indexed Security pursuant to the
Indenture; and
4. Debt Securities owned by the Company or any other obligor upon
the Debt Securities or any affiliate of the Company or of the
other obligor shall be disregarded.
The Indenture contains provisions for convening meetings of the
Holders of Debt Securities of a series. A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Company or
the Holders of at least 10% in principal amount of the Outstanding Debt
Securities of the series, in any case upon notice given as provided in the
Indenture. Except for any consent that must be given by the Holder of each
Debt Security affected by certain modifications and amendments of the
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present will be permitted to be adopted by the
affirmative vote of the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series; provided, however, that, except as
referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at
which a quorum is present by the affirmative vote of the Holders of the
specified percentage in principal amount of the Outstanding Debt Securities of
that series. Any resolution passed or decision taken at any meeting of Holders
of Debt Securities of any series duly held in accordance with the Indenture
will be binding on all Holders of Debt Securities of that series. The quorum
at any meeting called to adopt a resolution, and at any reconvened meeting,
will be Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at the meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the Persons holding or
representing the specified percentage in principal amount of the Outstanding
Debt Securities of the series will constitute a quorum.
Notwithstanding the foregoing provisions, any action to be taken at a
meeting of Holders of Debt Securities of any series with respect to any action
that the Indenture expressly provides may be taken by the Holders of a
specified percentage which is less than a majority in principal amount of the
Outstanding Debt Securities of a series may be taken at a meeting at which a
quorum is present by the affirmative vote of Holders of the specified
percentage in principal amount of the Outstanding Debt Securities of the
series.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any
series of Debt Securities that have not already been delivered to the Trustee
for cancellation and that either have become due and payable or will become
due and payable within one year (or scheduled for redemption within one year)
by irrevocably depositing with the Trustee, in trust, funds in the currency or
currencies, currency unit or units or composite currency or currencies in
which the Debt Securities are payable in an amount sufficient to pay the
entire indebtedness on the Debt Securities in respect of principal (and
premium, if any) and interest to the date of the deposit (if the Debt
Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be.
The Indenture provides that, unless these provisions are made
inapplicable to the Debt Securities of or within any series pursuant to the
Indenture, the Company may elect either (a) to defease and discharge itself
from any and all obligations with respect to the Debt Securities (except for
the obligation to pay additional amounts, if any, upon the occurrence of
certain events of tax, assessment or governmental charge with respect to
payments on the Debt Securities and the obligations to register the transfer
or exchange of Debt Securities, to replace temporary or mutilated, destroyed,
lost or stolen Debt Securities, to maintain an office or agency in respect of
the Debt Securities and to hold moneys for payment in trust) ("defeasance") or
(b) to release itself from their obligations with respect to the Debt
Securities under certain sections of the Indenture and, if provided pursuant
to the Indenture, their obligations with respect to any other covenant, and
any omission to comply with the obligations shall not constitute a default or
an Event of Default with respect to the Debt Securities ("covenant
defeasance"), in either case upon the irrevocable deposit by the Company with
the Trustee, in trust, of an amount, in the currency or currencies, currency
unit or units or composite currency or currencies in which the Debt Securities
are payable at Stated Maturity, or Government Obligations (as defined below),
or both, applicable to the Debt Securities which through the scheduled payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient to pay the principal of (and premium, if any) and
interest on the Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
A trust will only be permitted to be established if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel (as
specified in the Indenture) to the effect that the Holders of the Debt
Securities will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if the defeasance or covenant
defeasance had not occurred, and the Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law.
"Government Obligations" means securities which are (1) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (2)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or the government which issued
the foreign currency in which the Debt Securities of the series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or other government, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any Government Obligation or a specific
payment of interest on or principal of any Government Obligation held by the
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) the custodian is not authorized to make any
deduction from the amount payable to the holder of the depository receipt from
any amount received by the custodian in respect of the Government Obligation
or the specific payment of interest on or principal of the Government
Obligation evidenced by the depository receipt.
Unless otherwise provided in the applicable prospectus supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series:
(a) the Holder of a Debt Security of the series is entitled to, and
does, elect pursuant to the Indenture or the terms of the Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which the deposit has been made in respect of the Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which the deposit has been
made, the indebtedness represented by the Debt Security shall be deemed to
have been, and will be, fully discharged and satisfied through the payment of
the principal of (and premium, if any) and interest on the Debt Security as
they become due out of the proceeds yielded by converting the amount so
deposited in respect of the Debt Security into the currency, currency unit or
composite currency in which the Debt Security becomes payable as a result of
the election or the Conversion Event based on the applicable market exchange
rate.
"Conversion Event" means the cessation of use of:
o a currency, currency unit or composite currency both by the
government of the country which issued the currency and for the
settlement of transactions by a central bank or other public
institutions of or within the international banking community
or
o the euro both within the European Monetary System and for the
settlement of transactions by public institutions of or within
the European Community.
Unless otherwise provided in the applicable prospectus supplement,
all payments of principal of (and premium, if any) and interest on any Debt
Security that is payable in a foreign currency that ceases to be used by its
government of issuance shall be made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to
any Debt Securities and the Debt Securities are declared due and payable
because of the occurrence of any Event of Default other than the Event of
Default described in clause (d) under "Event of Default, Notice and Waiver"
with respect to sections no longer applicable to the Debt Securities or
described in clause (g) under "Events of Default, Notice and Waiver" with
respect to any other covenant as to which there has been covenant defeasance,
the amount in the currency, currency unit or composite currency in which the
Debt Securities are payable, and Government Obligations on deposit with the
Trustee, will be sufficient to pay amounts due on the Debt Securities at the
time of their Stated Maturity but may not be sufficient to pay amounts due on
the Debt Securities at the time of the acceleration resulting from the Event
of Default. However, the Company would remain liable to make payment of the
amounts due at the time of acceleration.
GOVERNING LAW
The Indenture and the Notes shall be governed by the laws of the
State of New York.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any Debt Securities are
convertible into debt securities or equity securities of the Company will be set
forth in the applicable prospectus supplement. The terms will include the number
or principal amount of securities into which the debt securities are
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the debt securities, or the Company, the events requiring an
adjustment of the conversion price (or the manner of calculation thereof) and
any provisions affecting conversion in the event of the redemption of the debt
securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the applicable prospectus supplement relating to the series. Global
Securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary arrangement
with respect to a series of Debt Securities will be described in the
applicable prospectus supplement relating to the series.
DESCRIPTION OF COMMON STOCK
GENERAL
Our charter (the "Charter") provides that we may issue up to 100
million shares of common stock, $.01 par value per share. On June 30, 1999,
there were 24,811,834 shares of common stock outstanding.
All shares of common stock offered hereby have been duly authorized
and will be fully paid and nonassessable. Subject to the preferential rights
of any other shares or series of stock and to the provisions of the Charter
regarding Excess Stock (as defined under "Restrictions on Ownership of Capital
Stock"), holders of shares of common stock offered hereby will be entitled to
receive dividends on the stock if, as and when authorized and declared by the
Board of Directors of the Company out of assets legally available therefor and
to share ratably in the assets of the Company legally available for
distribution to its common stockholders in the event of its liquidation,
dissolution or winding up after payment of or adequate provision for all known
debts and liabilities of the Company.
Subject to the provisions of the Charter regarding Excess Stock, each
outstanding share of common stock, the entitles the holder to one vote on all
matters submitted to a vote of stockholders, including the election of
directors, and, except as provided with respect to any other class or series
of stock, the holders of these shares will possess the exclusive voting power.
There is no cumulative voting in the election of directors, which means that
the holders of a majority of the outstanding shares of the Company's existing
common stock can elect all of the directors then standing for election and the
holders of the remaining shares will not be able to elect any directors.
Holders of shares of common stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any other securities. Subject to the provisions of the
Charter regarding Excess Stock, shares of common stock will have equal
dividend, liquidation and other rights.
CERTAIN PROVISIONS OF THE CHARTER
The Board of Directors is divided into three classes of directors,
each class constituting approximately one-third of the total number of
directors, with the classes serving staggered terms. At each annual meeting of
stockholders, the class of directors to be elected at the meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. We believe that classified directors will help to assure
the continuity and stability of the Board of Directors and our business
strategies and policies as determined by the Board. The use of a staggered
board may delay or defer a change in control or removal of incumbent
management.
RESTRICTIONS ON OWNERSHIP
In order for Reckson Associates to qualify as a REIT under the Code,
it must satisfy a variety of requirements, including annual tests with respect
to the nature of its gross income. Substantially all of Reckson Associates'
gross income meets these requirements by qualifying as "rentals from real
property" under Section 856(d) of the Code. Under this provision, however, a
REIT's real property rentals can be disqualified if the rent is received by
the REIT from a related party or if noncustomary services are performed for
the tenant other than by an independent contractor. The characterization of a
party as a related-party tenant or as an independent contractor depends, in
part, upon the percentage of stock, assets or net profits of such party that
may be owned by the REIT or by shareholders of the REIT. Such ownership may be
direct or may be indirect under certain attribution rules prescribed by the
Code. Currently, there is a substantial identity of ownership between
stockholders of Reckson Associates and stockholders of the Company. It cannot
be predicted how long or to what degree such identity of ownership may
continue. Therefore, in order to protect Reckson Associates from the risk that
rental income it earns from the Company or its affiliates, or from tenants
that the Company or its affiliates provides commercial services to, will not
be disqualified as rent from real property for REIT qualification purposes,
subject to certain exceptions, the ownership by any person or entity of the
Company's common stock is limited to 9.9% of the aggregate number or value of
shares of the Company's common stock outstanding and the ownership by any
person of the Company's capital stock is limited to 9.9% of the aggregate
value of all classes of capital stock outstanding.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American
Stock Transfer & Trust Company.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Our Charter provides that we may issue up to 25 million shares of
preferred stock, $.01 par value per share. On June 30, 1999 there were no
shares of preferred stock outstanding.
The issuance of preferred stock could adversely affect the voting
power, dividend rights and other rights of holders of common stock. Although
the Board of Directors has no intention at the present time, it could
establish a series of preferred stock that could, depending on the terms of
the series, delay, defer or prevent a transaction or a change in control of
the Company that might involve a premium price for the common stock or
otherwise be in the best interest of the holders thereof. Management believes
that the availability of preferred stock will provide us with increased
flexibility in structuring possible future financing and acquisitions and in
meeting other needs that might arise.
TERMS
Subject to the limitations prescribed by the Charter, the Board of
Directors is authorized to fix the number of shares constituting each series
of preferred stock and the designations and powers, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including the provisions as may be
desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion, and other subjects or matters
as may be fixed by resolution of the Board of Directors. The preferred stock
will, when issued, be fully paid and nonassessable and will have no preemptive
rights.
Reference is made to the prospectus supplement relating to the series
of preferred stock offered thereby for the specific terms thereof, including:
o The title and stated value of the preferred stock;
o The number of shares of the preferred stock, the liquidation
preference per share of the preferred stock and the offering
price of the preferred stock;
o The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to the preferred
stock;
o The date from which dividends on the preferred stock shall
accumulate, if applicable;
o The procedures for any auction and remarketing, if any, for the
preferred stock;
o The provision for a sinking fund, if any, for the preferred
stock;
o The provisions for redemption, if applicable, of the preferred
stock;
o Any listing of the preferred stock on any securities exchange;
o The terms and conditions, if applicable, upon which the
preferred stock may or will be convertible into our common
stock or debt securities including the conversion price or
manner of calculation thereof;
o The relative ranking and preferences of the preferred stock as
to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company;
o Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to
preserve the status of Reckson Associates as a REIT;
o A discussion of material federal income tax considerations
applicable to the preferred stock; and
o Any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
RANK
Unless otherwise specified in the applicable prospectus supplement,
the preferred stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank:
i. senior to the common stock and to all classes or series of
equity securities issued by the Company, the terms of which
provide that the equity securities shall rank junior to the
preferred stock;
ii. on a parity with all classes or series of equity securities
issued by the Company, other than those referred to in clauses
(i) and (iii); and
iii. junior to all classes or series of equity securities issued by
the Company which the terms of the preferred stock provide will
rank senior to it. The term "equity securities" does not
include convertible debt securities.
DIVIDENDS
Unless otherwise specified in the applicable prospectus supplement,
the preferred stock will have the rights with respect to payment of dividends
set forth below.
Holders of the preferred stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company,
out of assets of the Company legally available for payment, cash dividends in
the amounts and on the dates as will be set forth in, or pursuant to, the
applicable prospectus supplement. Each dividend shall be payable to holders of
record as they appear on the stock transfer books of the Company on the record
dates as shall be fixed by the Board of Directors of the Company.
Dividends on any series of preferred stock may be cumulative or
non-cumulative, as provided in the applicable prospectus supplement.
Dividends, if cumulative, will be cumulative from and after the date set forth
in the applicable prospectus supplement. If the Board of Directors of the
Company fails to declare a dividend payable on a dividend payment date on any
series of preferred stock for which dividends are non-cumulative, then the
holders of the series of preferred stock will have no right to receive a
dividend in respect of the related dividend period and the Company will have
no obligation to pay the dividend accrued for the period, whether or not
dividends on the series of preferred stock are declared payable on any future
dividend payment date.
If preferred stock of any series is outstanding, no full dividends
will be declared or paid or set apart for payment on any of the capital stock
of the Company of any other series ranking, as to dividends, on a parity with
or junior to the preferred stock of the series for any period unless:
o if the series of preferred stock has a cumulative dividend,
full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for the payment for all past dividend
periods and the then current dividend period or
o if the series of preferred stock does not have a cumulative
dividend, full dividends for the then current dividend period
have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart
for the payment on the preferred stock of the series.
When dividends are not paid in full (or a sum sufficient for the full
payment is not so set apart) upon preferred stock of any series and the shares
of any other series of preferred stock ranking on a parity as to dividends
with the preferred stock of the series, all dividends declared upon preferred
stock of the series and any other series of preferred stock ranking on a
parity as to dividends with the preferred stock shall be declared pro rata so
that the amount of dividends declared per share of preferred stock of the
series and the other series of preferred stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the preferred stock
of the series and the other series of preferred stock (which shall not include
any accumulation in respect of unpaid dividends for prior dividend periods if
the preferred stock does not have a cumulative dividend) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect
of any dividend payment or payments on preferred stock of the series which may
be in arrears.
Except as provided in the immediately preceding paragraph, unless (1)
if the series of preferred stock has a cumulative dividend, full cumulative
dividends on the preferred stock of the series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (2) if the series of preferred stock does not have a
cumulative dividend, full dividends on the preferred stock of the series have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for the then current
dividend period, no dividends (other than in shares of common stock or other
capital stock ranking junior to the preferred stock of the series as to
dividends and upon liquidation) shall be declared or paid or set aside for
payment or other distribution shall be declared or made upon the common stock,
or any other of the capital stock of the Company ranking junior to or on a
parity with the preferred stock of the series as to dividends or upon
liquidation, nor shall any shares of common stock, or any other capital stock
of the Company ranking junior to or on a parity with the preferred stock of
the series as to dividends or upon liquidation, be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares) by the Company
except:
(1) by conversion into or exchange for other capital stock of the
Company ranking junior to the preferred stock of the series as to dividends
and upon liquidation; or
(2) redemptions for the purpose of preserving the status of Reckson
Associates as a REIT.
REDEMPTION
If so provided in the applicable prospectus supplement, the preferred
stock will be subject to mandatory redemption or redemption at the option of
the Company, as a whole or in part, in each case upon the terms, at the times
and at the redemption prices set forth in the prospectus supplement.
The prospectus supplement relating to a series of preferred stock
that is subject to mandatory redemption will specify the number of shares of
the preferred stock that the Company will redeem in each year commencing after
a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accumulated and unpaid dividends thereon
(which shall not, if the preferred stock does not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable prospectus supplement.
If the redemption price for preferred stock of any series is payable only from
the net proceeds of the issuance of capital stock of the Company, the terms of
the preferred stock may provide that, if no capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, the preferred stock shall
automatically and mandatorily be converted into the applicable capital stock
of the Company pursuant to conversion provisions specified in the applicable
prospectus supplement.
Notwithstanding the foregoing, unless (1) if the series of preferred
stock has a cumulative dividend, full cumulative dividends on all shares of
any series of preferred stock shall have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, and (2) if the series of preferred stock does not have a cumulative
dividend, full dividends on the preferred stock of any series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for the then current dividend
period, no shares of any series of preferred stock shall be redeemed unless
all outstanding preferred stock of the series is simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of preferred stock of the series to preserve the status of Reckson
Associates as a REIT or pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding preferred stock of the series. In
addition, unless (1) if the series of preferred stock has a cumulative
dividend, full cumulative dividends on all outstanding shares of any series of
preferred stock have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment
for all past dividend periods and the then current dividend period, and (2) if
the series of preferred stock does not have a cumulative dividend, full
dividends on the preferred stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, the Company shall
not purchase or otherwise acquire, directly or indirectly, any shares of
preferred stock of the series (except by conversion into or exchange for
capital stock of the Company ranking junior to the preferred stock of the
series as to dividends and upon liquidation); provided, however, that the
foregoing shall not prevent the purchase or acquisition of preferred stock of
the series to preserve the status of Reckson Associates as a REIT or pursuant
to a purchase or exchange offer made on the same terms to holders of all
outstanding preferred stock of the series.
If fewer than all of the outstanding shares of preferred stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and the shares may be redeemed pro rata from the
holders of record of the shares in proportion to the number of the shares held
or for which redemption is requested by the holder (with adjustments to avoid
redemption of fractional shares) or by lot or in any other reasonable manner.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of record of preferred
stock of any series to be redeemed at the address shown on the stock transfer
books. Each notice shall state:
o the redemption date;
o the number of shares and series of the preferred stock to be
redeemed;
o the redemption price;
o the place or places where certificates for the preferred stock
are to be surrendered for payment of the redemption price;
o that dividends on the shares to be redeemed will cease to
accumulate on the redemption date; and
o the date upon which the holder's conversion rights, if any, as
to the shares shall terminate.
If fewer than all the shares of preferred stock of any series are to
be redeemed, the notice mailed to each holder thereof shall also specify the
number of shares of preferred stock to be redeemed from each holder. If notice
of redemption of any preferred stock has been given and if the funds necessary
for redemption have been set aside by the Company in trust for the benefit of
the holders of any preferred stock so called for redemption, then from and
after the redemption date dividends will cease to accumulate on the preferred
stock, and all rights of the holders of the preferred stock will terminate,
except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company (referred to herein as a "liquidation"),
then, before any distribution or payment shall be made to the holders of any
common stock or any other class or series of capital stock of the Company
ranking junior to the preferred stock of the series in the distribution of
assets upon any liquidation, dissolution or winding up of the Company, the
holders of the preferred stock shall be entitled to receive out of assets of
the Company legally available for distribution to shareholders liquidating
distributions in the amount of the liquidation preference per share (set forth
in the applicable prospectus supplement), plus an amount equal to all
dividends accumulated and unpaid thereon (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if the
preferred stock does not have a cumulative dividend). After payment of the
full amount of the liquidating distributions to which they are entitled, the
holders of preferred stock will have no rights or claim to any remaining
assets. In the event that, upon any voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Company are
insufficient to pay the amount of the liquidating distributions on all
outstanding preferred stock of the series and the corresponding amounts
payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with the preferred stock in the distribution of
assets, then the holders of the preferred stock and all other classes or
series of capital stock shall share ratably in any distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
The consolidation or merger of the Company with or into any other
entity, or the merger of another entity with or into the Company, or a
statutory share exchange by the Company, or the sale, lease or conveyance of
all or substantially all of the property or business of the Company, shall not
be deemed to constitute a liquidation, dissolution or winding up of the
Company.
VOTING RIGHTS
Holders of the preferred stock will not have any voting rights,
except as set forth below or as otherwise from time to time required by law or
as indicated in the applicable prospectus supplement.
Whenever dividends on any series of preferred stock shall be in
arrears for six or more quarterly periods, the holders of the preferred stock
(voting separately as a class with all other series of preferred stock upon
which like voting rights have been conferred and are exercisable) will be
entitled to vote for the election of two additional directors of the Company
at a special meeting called by the holders of record of at least ten percent
(10%) of any series of preferred stock so in arrears, unless the request is
received less than 90 days before the date fixed for the next annual or
special meeting of the stockholders, or at the next annual meeting of
stockholders, and at each subsequent annual meeting until (i) if the series of
preferred stock has a cumulative dividend, all dividends accumulated on the
shares of preferred stock for the past dividend periods and the then current
dividend period shall have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment or (ii) if the series of
preferred stock does not have a cumulative dividend, four quarterly dividends
shall have been fully paid or declared and a sum sufficient for the payment
thereof set aside for payment. In these cases, the entire Board of Directors
of the Company will be increased by two directors.
Unless provided otherwise for any series of preferred stock, so long
as any shares of the preferred stock remain outstanding, the Company will not,
without the affirmative vote or consent of the holders of at least two-thirds
of the shares of the series of preferred stock outstanding at the time, given
in person or by proxy, either in writing or at a meeting (the series voting
separately as a class):
(1) authorize or create, or increase the authorized or issued amount
of, any class or series of capital stock ranking senior to the preferred stock
with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Company, or reclassify any
authorized capital stock of the Company into preferred stock, or create,
authorize or issue any obligation or security convertible into or evidencing
the right to purchase any stock; or
(2) amend, alter or repeal the provisions of the Charter or the
Designating Amendment for the series of preferred stock, whether by merger,
consolidation or otherwise (an "Event"), so as to materially and adversely
affect any right, preference, privilege or voting power of the series of
preferred stock or the holders thereof;
provided, however, with respect to the occurrence of any of the
Events set forth in (2) above, so long as the series of preferred stock
remains outstanding with the terms thereof materially unchanged, taking into
account that upon the occurrence of an Event the Company may not be the
surviving entity, the occurrence of any Event shall not be deemed to
materially and adversely affect the rights, preferences, privileges or voting
powers of holders of the series of preferred stock; and provided, further,
that (x) any increase in the amount of the authorized preferred stock or the
creation or issuance of any other series of preferred stock, or (y) any
increase in the amount of authorized shares of the series of preferred stock
or any other series of preferred stock, in each case ranking on a parity with
or junior to the preferred stock of the series with respect to payment of
dividends or the distribution of assets upon liquidation, dissolution or
winding up of the Company, shall not be deemed to materially and adversely
affect the rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which the vote or consent would otherwise be
required shall be effected, all outstanding shares of the series of preferred
stock shall have been converted, redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect the redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of preferred
stock is convertible into shares of common stock or debt securities of the
Company will be set forth in the applicable prospectus supplement. The terms
will include the number of shares of common stock or aggregate principal
amount of debt securities, as the case may be, into which the shares of
preferred stock are convertible, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders of the preferred stock of the
Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of the
preferred stock.
SHAREHOLDER LIABILITY
Delaware law provides that no shareholder, including holders of
preferred stock, shall be personally liable for the acts and obligations of
the Company and that the funds and property of the Company shall be the only
recourse for these acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Restrictions on Ownership of Capital
Stock," in order to ensure Reckson Associates' status as a REIT under the
Code, the Designating Amendment for each series of preferred stock may contain
provisions restricting the ownership and transfer of the preferred stock. The
applicable prospectus supplement will specify any additional ownership
limitation relating to a series of preferred stock.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement,
the Registrar and Transfer Agent for the preferred stock will be American
Stock Transfer & Trust Company.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest or a share of a
particular series of a class of preferred stock, as specified in the
applicable prospectus supplement. Preferred stock of each series of each class
represented by Depositary Shares will be deposited under a separate Deposit
Agreement (each, a "Deposit Agreement") among the Company, the depositary
named therein (the depositary or its successor, the "Preferred Stock
Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the Deposit Agreement, each owner of a Depositary
Receipt will be entitled, in proportion to the fractional interest of a share
of the particular series of a class of preferred stock represented by the
Depositary Shares evidenced by the Depositary Receipt, to all the rights and
preferences of the preferred stock represented by the Depositary Shares,
including dividend, voting, conversion, redemption and liquidation rights.
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the preferred stock by the Company to the Preferred
Stock Depositary, the Company will cause the Preferred Stock Depositary to
issue, on our behalf, the Depositary Receipts. Copies of the applicable form
of Deposit Agreement and Depositary Receipt may be obtained from the Company
upon request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or
other cash distributions received in respect of the preferred stock to the
record holders of the Depositary Receipts evidencing the related Depositary
Shares in proportion to the number of the Depositary Receipts owned by the
holder, subject to certain obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to the Preferred
Stock Depositary.
In the event of a distribution other than in cash, the Preferred
Stock Depositary will distribute property received by it to the record holders
of Depositary Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Stock Depositary, unless the Preferred
Stock Depositary determines that it is not feasible to make the distribution,
in which case the Preferred Stock Depositary may, with the approval of the
Company, sell the property and distribute the net proceeds from the sale to
holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust
office of the Preferred Stock Depositary (unless the related Depositary Shares
have previously been called for redemption), the holders thereof will be
entitled to delivery at the office, to or upon the holder's order, of the
number of whole or fractional shares of preferred stock and any money or other
property represented by the Depositary Shares evidenced by the Depositary
Receipts. Holders of Depositary Receipts will be entitled to receive whole or
fractional shares of the related preferred stock on the basis of the
proportion of preferred stock represented by each Depositary Share as
specified in the applicable prospectus supplement, but holders of the
preferred stock will not thereafter be entitled to receive Depositary Shares
therefor. If the Depositary Receipts delivered by the holder evidence a number
of Depositary Shares in excess of the number of Depositary Shares representing
the number of shares of preferred stock to be withdrawn, the Preferred Stock
Depositary will deliver to the holder at the same time a new Depositary
Receipt evidencing the excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems preferred stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the preferred
stock so redeemed, provided the Company shall have paid in full to the
Preferred Stock Depositary the redemption price of the preferred stock to be
redeemed plus an amount equal to any accrued and unpaid dividends thereon to
the date fixed for redemption. The redemption price per Depositary Share will
be equal to the redemption price and any other amounts per share payable with
respect to the preferred stock. If less than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected by the
Preferred Stock Depositary by lot.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of
the holders of the Depositary Receipts evidencing the Depositary Shares so
called for redemption will cease, except the right to receive any moneys
payable upon redemption and any money or other property to which the holders
of the Depositary Receipts were entitled upon redemption upon surrender
thereof to the Preferred Stock Depositary.
VOTING OF THE UNDERLYING PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the
preferred stock are entitled to vote, the Preferred Stock Depositary will mail
the information contained in the notice of meeting to the record holders of
the Depositary Receipts evidencing the Depositary Shares which represent the
preferred stock. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the
record date for the preferred stock) will be entitled to instruct the
Preferred Stock Depositary as to the exercise of the voting rights pertaining
to the amount of preferred stock represented by the holder's Depositary
Shares. The Preferred Stock Depositary will vote the amount of preferred stock
represented by the Depositary Shares in accordance with the instructions, and
we will agree to take all reasonable action which may be deemed necessary by
the Preferred Stock Depositary in order to enable the Preferred Stock
Depositary to do so. The Preferred Stock Depositary will abstain from voting
the amount of preferred stock represented by the Depositary Shares to the
extent it does not receive specific instructions from the holders of
Depositary Receipts evidencing the Depositary Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, each holder of a Depositary Receipt
will be entitled to the fraction of the liquidation preference accorded each
share of preferred stock represented by the Depositary Share evidenced by the
Depositary Receipt, as set forth in the applicable prospectus supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into common stock
or any other securities or property of the Company. Nevertheless, if so
specified in the applicable prospectus supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the Preferred Stock Depositary with written instructions to the
Preferred Stock Depositary to instruct the Company to cause conversion of the
preferred stock represented by the Depositary Shares evidenced by Depositary
Receipts into whole shares of common stock, other preferred stock of the
Company or other shares of capital stock of the Company, and the Company has
agreed that upon receipt of instructions and any amounts payable in respect
thereof, it will cause the conversion thereof utilizing the same procedures as
those provided for delivery of preferred stock to effect the conversion. If
the Depositary Shares evidenced by a Depositary Receipt are to be converted in
part only, one or more new Depositary Receipts will be issued for any
Depositary Shares not to be converted. No fractional shares of common stock
will be issued upon conversion, and if the conversion will result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the common stock on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the preferred stock and any provision of the Deposit Agreement may
at any time be amended by agreement between the Company and the Preferred
Stock Depositary. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Receipts will not be effective unless
the amendment has been approved by the existing holders of at least a majority
of the Depositary Shares evidenced by the Depositary Receipts then
outstanding.
The Deposit Agreement may be terminated by the Company upon not less
than 30 days' prior written notice to the Preferred Stock Depositary if (1)
the termination is to preserve the status of Reckson Associates as a REIT or
(2) a majority of each class of preferred stock affected by the termination
consents to the termination, whereupon the Preferred Stock Depositary shall
deliver or make available to each holder of Depositary Receipts, upon
surrender of the Depositary Receipts held by the holder, the number of whole
or fractional shares of preferred stock as are represented by the Depositary
Shares evidenced by Depositary Receipts. In addition, the Deposit Agreement
will automatically terminate if (1) all outstanding Depositary Shares shall
have been redeemed, (2) there shall have been a final distribution in respect
of the related preferred stock in connection with any liquidation, dissolution
or winding up of the Company and the distribution shall have been distributed
to the holders of Depositary Receipts evidencing the Depositary Shares
representing the preferred stock or (iii) each related share of preferred
stock shall have been converted into capital stock of the Company not so
represented by Depositary Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the Deposit Agreement. In
addition, the Company will pay the fees and expenses of the Preferred Stock
Depositary in connection with the performance of its duties under the Deposit
Agreement. However, holders of Depositary Receipts will pay the fees and
expenses of the Preferred Stock Depositary for any duties requested by the
holders to be performed which are outside of those expressly provided for in
the Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering
to the Company notice of its election to do so, and the Company may at any
time remove the Preferred Stock Depositary, any resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depositary. A
successor Preferred Shares Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related preferred stock.
Neither the Company nor the Preferred Stock Depositary will be liable
if the Preferred Stock Depositary is prevented from or delayed in, by law or
any circumstances beyond its control, performing its obligations under the
Deposit Agreement. The obligations of the Company and the Preferred Stock
Depositary under the Deposit Agreement will be limited to performing specified
duties thereunder in good faith and without negligence, gross negligence or
willful misconduct, and the Company and the Preferred Stock Depositary will
not be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or preferred stock represented thereby
unless satisfactory indemnity is furnished. The Company and the Preferred
Stock Depositary may rely on written advice of counsel or accountants, or
information provided by persons presenting the preferred stock represented
thereby for deposit, holders of Depositary Receipts or other persons believed
to be competent to give information, and on documents believed to be genuine
and signed by a proper party.
If the Preferred Stock Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and from the Company, on the other hand, the Preferred Stock Depositary
shall be entitled to act on claims, requests or instructions received from the
Company.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
EXCESS STOCK
The Charter provides that the Company may issue up to 25 million
shares of excess stock, par value $.01 per share ("Excess Stock"). For a
description of Excess Stock, see "--Restrictions on Ownership" below.
RESTRICTIONS ON OWNERSHIP
As described above, in order to protect Reckson Associates against
the risk of failing to satisfy certain tax laws applicable to REITs, our
Charter provides that no stockholder may own, or be deemed to own by virtue of
the attribution provisions of the Code, more than 9.9% (the "Ownership Limit")
of the aggregate number or value of the Company's outstanding shares of common
stock, or more than 9.9% of the aggregate value of the outstanding shares of
all classes of the Company's capital stock, provided that in no event will a
stockholder be limited in the amount of the Company's common stock acquired in
connection with awards or exercises of employee stock options. In the event we
issue preferred stock, we may, in the designating amendment, set a limit on
the ownership of such preferred stock. Any direct or indirect ownership of
shares of stock in excess of the Ownership Limit or that would result in
common ownership among 10% holders of the Company's common stock and Reckson
Associates' common stock, will be null and void, and the intended transferee
will acquire no rights to the shares of capital stock. The foregoing
restrictions on transferability and ownership will not apply if Reckson
Associates determines that it is no longer in its best interests to attempt to
qualify, or to continue to qualify, as a REIT. Under the terms of the
Intercompany Agreement, the Company's Board of Directors will have the right
to waive the Ownership Limit only if permission to do so is granted by Reckson
Associates, in Reckson Associates' sole discretion, and the Company's Board of
Directors otherwise decides that such action is the best interest of the
Company.
Shares of capital stock owned, or deemed to be owned, or transferred
to a stockholder in excess of the Ownership Limit or the Aggregate Ownership
Limit (9.9% of the aggregate value of all outstanding classes of stock of the
Company) will automatically be converted into shares of Excess Stock that will
be transferred, by operation of law, to the trustee of a trust for the
exclusive benefit of one or more charitable organizations described in Section
170(b) (1) (A) and 170(c) of the Code (the "Charitable Beneficiary"). The
trustee of the trust will be deemed to own the Excess Stock for the benefit of
the Charitable Beneficiary on the date of the violative transfer to the
original transferee-stockholder. Any dividend or distribution paid to the
original transferee-stockholder of Excess Stock prior to the discovery by the
Company that capital stock has been transferred in violation of the provisions
of the Company's Charter will be repaid to the trustee upon demand. Any
dividend or distribution authorized and declared but unpaid shall be rescinded
as void ab initio with respect to the original transferee-stockholder and will
instead be paid to the trustee of the trust for the benefit of the Charitable
Beneficiary. Any vote cast by an original transferee-stockholder of shares of
capital stock constituting Excess Stock prior to the discovery by the Company
that shares of capital stock have been transferred in violation of the
Company's Certificate of Incorporation shall be rescinded as void ab initio.
While the Excess Stock is held in trust, the original transferee-stockholder
will be deemed to have given an irrevocable proxy to the trustee to vote the
capital stock for the benefit of the Charitable Beneficiary. The trustee of
the trust may transfer the interest in the trust representing the Excess Stock
to any person whose ownership of the shares of capital stock converted into
such Excess Stock would be permitted under the Ownership Limit and the
Aggregate Ownership Limit. If such transfer is made, the interest of the
Charitable Beneficiary will terminate and the proceeds of the sale will be
payable to the original transferee-stockholder and to the Charitable
Beneficiary as described herein. The original transferee-stockholder will
receive the lesser of (i) the price paid by the original
transferee-stockholder for the shares of capital stock that were converted
into Excess Stock or, if the original transferee-stockholder did not give
value for such shares (e.g., the stock was received through a gift, devise or
other transaction), the average closing price for the class of shares from
which such shares of capital stock were converted for the ten trading days
immediately preceding such sale or gift, and (ii) the price received by the
trustee from the sale or other disposition of the Excess Stock held in trust.
The trustee may reduce the amount payable to the original
transferee-stockholder by the amount of dividends and distributions relating
to the shares of Excess Stock which have been paid to the original
transferee-stockholder and are owed by the Original transferee-stockholder to
the trustee. Any proceeds in excess of the amount payable to the original
transferee-stockholder will be paid by the trustee to the Charitable
Beneficiary. Any liquidation distributions relating to Excess Stock will be
distributed in the same manner as proceeds of a sale of Excess Stock. If the
foregoing transfer restrictions are determined to be void or invalid by virtue
of any legal decision, statute, rule or regulations, then the original
transferee-stockholder of any shares of Excess Stock may be deemed, at the
option of the Company, to have acted as an agent on behalf of the Company in
acquiring the shares of Excess Stock and to hold the shares of Excess Stock on
behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of Excess Stock are held in trust, to purchase all
or any portion of the shares of Excess Stock at the lesser of (i) the price
initially paid for such shares by the original transferee-stockholder, or if
the original transferee-stockholder did not give value for such shares (e.g.,
the shares were received through a gift, devise or other transaction), the
average closing price for the class of stock from which such shares of Excess
Stock were converted for the ten trading days immediately preceding such sale
or gift, and (ii) the average closing price for the class of stock from which
such shares of Excess Stock were converted for the ten trading days
immediately preceding the date the Company elects to purchase such shares. The
Company may reduce the amount payable to the original transferee-stockholder
by the amount of dividends and distributions relating to the shares of Excess
Stock which have been paid to the original transferee-stockholder and are
owned by the original transferee-stockholder to the trustee. The Company may
pay the amount of such reductions to the trustee for the benefit of the
Charitable Beneficiary. The 90-day period begins on the later date of which
notice is received of the violative transfer if the original
transferee-stockholder gives notice to the Company of the transfer or, if no
such notice is given, the date the Company's Board of Directors determines
that a violative transfer has been made.
All certificates representing shares of capital stock will bear a
legend referring to the restrictions described above.
Each stockholder will be required, upon demand by the Company, to
disclose to the Company in writing any information with respect to the direct,
indirect and constructive ownership of capital stock of the Company as Reckson
Associates deems necessary for Reckson Associates to determine its compliance
with the provisions of the Code applicable to REITs.
The Company is required to maintain in its Charter the foregoing
Ownership Limit, Excess Stock and stock ownership disclosure requirements
under the terms of the Intercompany Agreement.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of the Company.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of common stock or
preferred stock. Warrants to purchase common stock may include rights to
purchase common stock that the Company issues to its common stock holders as a
dividend. Warrants may be issued independently or together with any securities
and may be attached to or separate from the securities. Each series of
Warrants will be issued under a separate warrant agreement (each, a "Warrant
Agreement") to be entered into between the Company and a warrant agent
specified therein ("Warrant Agent"). The Warrant Agent will act solely for the
Company in connection with the Warrants of the series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants.
The applicable prospectus supplement will describe the following
terms, where applicable, of the Warrants in respect of which this prospectus
is being delivered:
o the title of the Warrants;
o the aggregate number of the Warrants;
o whether separate consideration will be issued for the Warrants
and, if so, the price or prices at which the Warrants will be
issued;
o the currencies in which the price or prices of the Warrants may
be payable, if applicable;
o the designation, amount and terms of the Securities purchasable
upon exercise of the Warrants;
o the designation and terms of the other Securities, if any, with
which the Warrants are issued and the number of the Warrants
issued with each security;
o if applicable, the date on and after which the Warrants and the
Securities purchasable upon exercise of the Warrants will be
separately transferable;
o the price or prices at which and currency or currencies in
which the Securities purchasable upon exercise of the Warrants
may be purchased;
o the date on which the right to exercise the Warrants shall
commence and the date on which the right shall expire;
o the minimum or maximum amount of the Warrants which may be
exercised at any one time;
o information with respect to book-entry procedures, if any;
o a discussion of material federal income tax considerations; and
o any other material terms of the Warrants, including terms,
procedures and limitations relating to the exchange and
exercise of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell the securities to one or more underwriters for
public offering and sale by them or may sell the securities to investors
directly or through agents. Any underwriter or agent involved in the offer and
sale of the securities will be named in the applicable prospectus supplement.
Underwriters may offer and sell the securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company also may, from
time to time, authorize underwriters acting as their agents to offer and sell
the securities upon the terms and conditions as are set forth in the
applicable prospectus supplement. In connection with the sale of securities,
underwriters may be deemed to have received compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of securities for whom they may act as agent.
Underwriters may sell securities to or through dealers, and dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agent.
Direct sales to investors may be accomplished through subscription
offerings or through subscription rights distributed to our stockholders. In
connection with subscription offerings or the distribution of subscription
rights to stockholders, if all of the underlying offered securities are not
subscribed for, we may sell such unsubscribed offered securities to third
parties directly (including third parties that are affiliated with us) or
through agents and, in addition, whether or not all of the underlying offered
securities are subscribed for, we may concurrently offer additional offered
securities to third parties directly or through agents, which agents may be
affiliated with us. Any underwriter or agent involved in the offer and sale of
the offered securities will be named in the applicable prospectus supplement.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of securities, and any discounts,
concessions for commissions allowed by underwriters to participating dealers,
will be set forth in the applicable prospectus supplement. Underwriters,
dealers and agents participating in the distribution of the securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the securities may be deemed to
be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for, the Company and its
subsidiaries in the ordinary course of business.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby and
certain legal matters will be passed upon for the Company by Brown & Wood LLP,
New York, New York.
EXPERTS
The consolidated financial statements of Reckson Service Industries,
Inc. (the "Company") as of and for the year ended December 31, 1998 and for
the period July 15, 1997 to December 31, 1997 appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998; and the
consolidated financial statements of Interoffice Superholdings Corporation and
Subsidiaries for the period November 9, 1998 to December 31, 1998 appearing in
the Company's Form 10-K for the year ended December 31, 1998; and the
consolidated financial statements of RSVP Holdings, LLC for the period
February 26, 1998 to December 31, 1998, appearing in the Company's Form 10-K
for the year ended December 31, 1998; and the combined financial statements of
Xebec Management Services, Inc. and affiliate for the years ended December 31,
1997 and 1996, appearing in the Company's Form 8-K dated January 19, 1999; and
the consolidated financial statements of InterOffice (Holdings) Corporation
and Subsidiaries for the years ended December 31, 1997, 1996 and 1995
appearing in the Company's Form 8-K dated January 19, 1999, have in each case
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon, incorporated herein by reference. Such consolidated and
combined financial statements are incorporated herein by reference in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The financial statements incorporated in this Prospectus by reference
to the audited historical consolidated financial statements of ALLIANCE
NATIONAL Incorporated and Subsidiaries as of June 30, 1998 and 1997 and
December 31, 1998 and for the years ended June 30, 1998, 1997 and 1996 and for
the period July 1, 1998 to December 31, 1998 appearing in Reckson Service
Industries, Inc.'s Form 8-K/A dated March 24, 1999, have been so incorporated
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
<PAGE>
=========================================== ==================================
-----------------
TABLE OF CONTENTS
Prospectus
Risk Factors.............................1
Available Information...................11
Incorporation of Certain
Documents by Reference ...............11
The Company.............................12
Use of Proceeds.........................13
Ratios of Earnings to RECKSON SERVICE
Combined Fixed Charges................13 INDUSTRIES, INC.
Description of Debt Securities..........14
Description of Common Stock.............27
Description of Preferred Stock..........29
Description of Depositary Shares........36
Restrictions on Ownership of
Capital Stock.........................39
Description of Warrants.................41
Plan of Distribution....................42
Legal Matters...........................43
Experts.................................43
-----------------
=========================================== ==================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated expenses in connection with
the issuance and distribution of the Registrant's securities being registered
hereby, other than underwriting discounts and commissions, all of which will
be borne by the Registrant:
Securities and Exchange Commission registration fee....... $139,000
NASD fees................................................. $ 30,500
Printing and engraving expenses........................... $300,000
Legal fees and expenses................................... $300,000
Accounting fees and expenses.............................. $ 80,000
Blue Sky fees and expenses................................ $ 20,000
Trustee's fees............................................ $ 10,000
Miscellaneous............................................. $ 70,500
--------
Total $950,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law (the "Delaware Law") provides
that a corporation may limit the liability of each director to the corporation
of its stockholders for monetary damages except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, and
(iv) for any transaction from which the director derives an improper personal
benefit. The Certificate of Incorporation and ByLaws provide for the
elimination and limitation of the personal liability of directors of the
Company for monetary damages to the fullest extent permitted by the Delaware
Law. In addition, the Certificate of Incorporation and Bylaws provide that if
the Delaware Law is amended to authorize the further elimination or limitation
of the liability of a director, then the liability of the directors shall be
eliminated or limited to the fullest extent permitted by the Delaware Law, as
so amended. The effect of this provision is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
the fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described in
clauses (i) through (iv) above. The provision does not limit or eliminate the
rights of the Company or any stockholder to seek non-monetary relief such as
an injunction or rescission in the event of a breach of a director's duty of
care. In addition, the Bylaws provide that the Company shall, to the full
extent permitted by the Delaware Law, as amended from time to time, indemnify
and advance expenses to each of its currently acting and former directors,
officers, members of the management advisory committee, employees and agents.
<PAGE>
ITEM 16. EXHIBITS.
1 -- Form of Underwriting Agreement.(1)
4.1 -- Form of Common Stock Certificate.(2)
4.2 -- Form of Designating Amendment for Preferred Stock.(1)
4.3 -- Form of Preferred Stock Certificate.(1)
4.4 -- Form of Warrant Agreement.(1)
4.5 -- Form of Warrant.(1)
4.6 -- Form of Indenture.(1)
5 -- Opinion of Brown & Wood LLP as to the legality of the Securities.
12.1 -- Calculation of Ratios of Earnings to Combined Fixed Charges.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of PricewaterhouseCoopers LLP
24 -- Power of attorney (included on the signature page of this
Registration Statement).
27 -- Financial Data Schedule.
- ---------------
(1) To be filed by amendment or incorporated by reference in connection with
the offering of Securities.
(2) Previously filed as an exhibit to Registration Statement on Form S-1 (No.
333-44419) and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or 15(d) of the Exchange Act that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, partners and
controlling persons of Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by Registrant of expenses incurred or paid by a director,
officer, partner or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, partner or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(d) Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305 (b)(2) of the Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Reckson
Service Industries, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Huntington, State
of New York, on August 3, 1999.
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ Scott H. Rechler
----------------------------
Scott H. Rechler
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald Rechler, Scott H. Rechler and
Michael Maturo, and each of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capabilities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement and Power of Attorney have been signed by
the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Donald J. Rechler Chairman of the Board August 3, 1999
- -------------------------- and Director
Donald J. Rechler
/s/ Scott H. Rechler President, Chief Executive August 3, 1999
- -------------------------- Officer and Director
Scott H. Rechler (Principal Executive Officer)
/s/ Michael Maturo Executive Vice President, August 3, 1999
- -------------------------- Treasurer, Chief Financial
Michael Maturo Officer (Principal Financial
Officer and Principal Accounting
Officer) and Director
/s/ Roger M. Rechler Director August 3, 1999
- --------------------------
Roger M. Rechler
/s/ Mitchell D. Rechler Secretary and Director August 3, 1999
- --------------------------
Mitchell D. Rechler
/s/ Gregg M. Rechler Director August 3, 1999
- --------------------------
Gregg M. Rechler
/s/ Paul F. Amoruso Director August 3, 1999
- --------------------------
Paul F. Amoruso
/s/ Ronald Cooper Director August 3, 1999
- --------------------------
Ronald Cooper
<PAGE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION PAGE
- -------- ----------- ----
5 -- Opinion of Brown & Wood LLP as to the
legality of the Securities.
12.1 -- Calculation of Ratios of Earnings to Combined
Fixed Charges.
23.1 -- Consent of Brown & Wood LLP (included in
Exhibit 5).
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of PricewaterhouseCoopers LLP
24 -- Power of attorney (included on the signature page
of this Registration Statement).
27 -- Financial Data Schedule.
EXHIBIT 5
Brown & Wood LLP
One World Trade Center
New York, N.Y 10048-0557
Telephone: 212-839-5300
Facsimile: 212-839-5599
August 3, 1999
Reckson Service Industries, Inc.
10 East 50th Street
New York, New York 10022
Ladies and Gentlemen:
This opinion is furnished in connection with the Registration Statement
on Form S-3 (the "Registration Statement"), pursuant to the Securities Act of
1933, as amended (the "Securities Act"), relating to the offering from time to
time, as set forth in the prospectus contained in the Registration Statement
(the "Prospectus") and, as supplemented by one or more supplements to the
Prospectus (each, a "Prospectus Supplement"), of Common Stock, Common Stock
Warrants (including Rights to Purchase Common Stock), Preferred Stock,
Preferred Stock Warrants, Depositary Shares and Debt Securities of Reckson
Service Industries, Inc., a Delaware corporation (the "Company"), with an
aggregate public offering price of up to $500,000,000 (collectively, the
"Securities").
In connection with rendering this opinion, we have examined the Company's
First Amended and Restated Certificate of Incorporation and Bylaws, as
amended, records of the Company's corporate proceedings, the Registration
Statement and such other certificates, records, receipts and documents as we
considered necessary for the purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
(a) The shares of Common Stock have been duly authorized by the Company
and, when (i) duly executed and delivered by the Company pursuant to the
authority granted by the Company's Board of Directors and (ii) paid for by the
purchasers thereof, will be validly issued, fully paid and nonassessable.
(b) The shares of Preferred Stock have been duly authorized by the
Company and, when (i) the final terms thereof have been duly established by
the Company in accordance with the designating amendment and certificates
representing such shares have been duly executed and delivered by the Company
pursuant to the authority granted by the Company's Board of Directors and (ii)
paid for by the purchasers thereof, will be validly issued, fully paid and
nonassessable.
(c) The Depositary Shares have been duly authorized by the Company and,
when (i) the final terms thereof have been duly established by the Company
pursuant to authority granted by the Company's Board of Directors, (ii) the
Depositary Receipts (as defined in the Prospectus) representing such
Depositary Shares have been duly executed and delivered by the applicable
Depositary in accordance with the applicable Deposit Agreement, (iii) paid for
by the purchasers thereof and (iv) all necessary action for the issuance of
the underlying Preferred Stock has been taken, will be validly issued and will
entitle the registered holders thereof to the rights specified in such Deposit
Agreement, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law).
(d) The Warrants have been duly authorized by the Company and, when (i)
the final terms thereof have been duly established by the Company and
certificates representing such Warrants have been duly executed by the Company
pursuant to the authority granted by the Company's Board of Directors, (ii)
countersigned and delivered by the applicable Warrant Agent in accordance with
the applicable Warrant Agreement and (iii) paid for by the purchasers thereof,
will constitute valid and legally binding obligations of the Company and will
entitle the registered holders thereof to the rights specified in such Warrant
Agreement, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(e) The Debt Securities have been duly authorized by the Company, and
when (i) the applicable provisions of the Securities Act and such state "blue
sky" or securities laws as may be applicable have been complied with, (ii) the
Company and the Trustee have duly executed and delivered the Indenture and
(iii) the final terms of the Debt Securities have been duly established and
approved and have been duly executed, authenticated and delivered against
consideration therefor as contemplated in the Registration Statement, such
Debt Securities will constitute valid and legally binding obligations of the
Company and registered holders of such Debt Securities will be entitled to the
benefits of the Indenture; provided, however, that the foregoing opinion is
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement of
creditors' rights generally and to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
The foregoing assumes that all requisite steps will be taken to comply
with the requirements of the Securities Act and applicable requirements of
state laws regulating the offer and sale of securities.
We are attorneys admitted to practice in the State of New York. We
express no opinion concerning the laws of any jurisdiction other than the
federal laws of the United States of America, the General Corporation Law of
the State of Delaware and the laws of State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 12.1
Reckson Service Industries, Inc.
Ratios of Earnings to Combined Fixed Charges
The following table sets forth the calculation of the Company's
consolidated ratio of earnings to fixed charges for the periods shown (in
Thousands):
<TABLE>
<CAPTION>
For the Period from For the
January 1 to March 31, Year Ended
---------------------- ------------------------
1999 1998 1997
---- ---- ----
DESCRIPTION
- -----------
<S> <C> <C> <C>
Interest $1,217,645 $1,651,200 $24,380
Rent Expense 41,161 177,235 0
Amortization of
Organization Costs 0 0 8,214
Total 1,258,806 1,828,435 32,594
Income from Continuing
Operations before Minority
Interest and Fixed Charges ($696,292) ($6,251,423) ($225,293)
Ratio of Earnings to Fixed Charges -0.55 -3.42 -6.91
</TABLE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3), of Reckson Service Industries, Inc. (the
"Company") for the registration of $500,000,000 of common stock, common stock
warrants, preferred stock, preferred stock warrants, depositary shares and
debt securities with respect to the Company. We also consent to the
incorporation by reference of our reports dated (i) March 12, 1999, with
respect to the consolidated financial statements of the Company included in
its Annual Report (Form 10-K) for the year ended December 31, 1998 and for the
period July 15, 1997 to December 31, 1997 filed with the Securities and
Exchange Commission on March 31,1999, (ii) March 12, 1999, with respect to the
consolidated financial statements of Interoffice Superholdings Corporation and
Subsidiaries for the period November 9, 1998 to December 31, 1998 included in
the Company's Form 10-K filed with the Securities and Exchange Commission on
March 31, 1999, (iii) March 5, 1999, with respect to the consolidated
financial statements of RSVP Holdings, LLC for the period February 26, 1998 to
December 31, 1998, included in the Company's Form 10-K filed with the
Securities and Exchange Commission on March 31, 1999, (iv) January 4, 1999,
with respect to the combined financial statements of Xebec Management
Services, Inc. and affiliate for the years ended December 31, 1997 and 1996,
included in the Company's Form 8-K filed with the Securities and Exchange
Commission on January 19, 1999 and (v) September 18, 1998, with respect to the
consolidated financial statements of InterOffice (Holdings) Corporation and
Subsidiaries for the years ended December 31, 1997, 1996 and 1995 included in
the Company's Form 8-K filed with the Securities and Exchange Commission on
January 19, 1999.
/s/ Ernst & Young LLP
New York, New York
August 2, 1999
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement of Reckson Service Industries, Inc. on Form S-3 of our report dated
February 26, 1999 relating to the consolidated financial statements of
ALLIANCE NATIONAL Incorporated and Subsidiaries, which appears in Reckson
Service Industries, Inc.'s Current Report on Form 8-K/A dated March 24, 1999.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
New York, New York
August 2, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001052743
<NAME> RECKSON SERVICE INDUSTRIES, INC.
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0
0
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</TABLE>
